'Too Late' Presidential Orders... Five Auctioned Empty Jeonse Apartments in Michuhol Passed to Debt Collection Agency

Government Implements Auction Postponement for Jeonse Fraud Victims
But 45 Houses Transferred to Loan Companies Cannot Be Delayed
Michuhol-gu Auction Properties Called "1+1, Bargain Sale"

Although the government announced that it would implement an auction suspension measure for houses occupied by victims of jeonse fraud, it has been confirmed that auctions are still ongoing for houses whose claims have been transferred to loan and debt collection companies. Since loan and debt collection companies are essentially private entities, they are not obligated to accept the government's recommended 'voluntary suspension' measure.

[Image source=Yonhap News]

According to the Korea Court Auction Information website, as of the 20th, the first auction date for five apartments in ‘ㄷ’ Apartment located in Michuhol-gu, Incheon, which are houses victimized by jeonse fraud, is set for the 3rd of next month. This is the day after the government held the first meeting of the 'Inter-Ministerial Task Force (TF) for Jeonse Fraud Victim Support' on the 19th and announced that the auction suspension measure for houses victimized by jeonse fraud would be implemented from the 20th. On the other hand, unlike these, the auction date for one apartment in ‘ㅎ’ Apartment located in Michuhol-gu, which was supposed to be finalized on the same day, was postponed. Upon checking the registry, the creditor was found to be D Credit Cooperative, a secondary financial institution. In other words, the five places with scheduled auction dates have already had their claims transferred to loan and debt collection companies, making it impossible to take action even under President Yoon Seok-yeol’s direct order to halt auctions. Although the government stated that it would seek cooperation when financial companies transfer claims to debt collection companies, since these companies are not obligated to accept this, a blind spot appears to have emerged.

Given this situation, the problem becomes serious if a significant number of the victimized apartments are transferred to loan and debt collection companies. Among the 131 financial institutions holding claims related to jeonse fraud in Michuhol-gu, only two are banks, and the rest are all secondary financial institutions. Typically, financial companies transfer non-performing loans to loan and debt collection companies to prevent an increase in default rates once the houses go to auction.

According to the Michuhol-gu Jeonse Fraud Victim Countermeasure Committee (Countermeasure Committee), the victimized house that became a hot topic for having an entire apartment building (45 units) go to auction had already had its claims transferred to a loan company in Seoul as of September last year. Most of these transferred non-performing loans proceed with auctions as is. On the previous day, all four houses auctioned at the Incheon District Court auction, which were victimized by jeonse fraud in Michuhol-gu, had creditors who were all loan and debt collection companies.

A representative of the Michuhol-gu Countermeasure Committee said, "The day after the president ordered the suspension or postponement of auctions for houses victimized by jeonse fraud at a Cabinet meeting, an auction proceeded in the Incheon District Court auction courtroom, and one unit was sold," adding, "It has been confirmed that more than 400 mortgages set on victimized houses have been transferred to debt collection companies, so it is uncertain whether the auction suspension will apply to these households."

Despite the government’s countermeasure announcement, as auctions continue, the National Countermeasure Committee for Jeonse Fraud Victims of Empty Jeonse announced that it would hold a press conference at 11 a.m. in front of the Incheon District Court on the same day with the message, "Auctions of victimized houses are still ongoing. Immediately stop auctions that treat the lives of jeonse fraud victims as investment opportunities!" The committee plans to demand that the court intervene ex officio to mediate auctions of houses victimized by jeonse fraud.

Meanwhile, as houses victimized by jeonse fraud flood the auction market, auction hunters targeting these properties have also appeared. Some auction participants, as well as real estate-related YouTube broadcasts, are inciting auctions by repeatedly using provocative expressions such as "1+1 event, bargain sale ongoing." The appraised value of auction properties located in Michuhol-gu is estimated to be in the low 200 million KRW range. However, due to repeated failures to sell, the average winning bid price has dropped to the low 100 million KRW range, about 50% of the appraised value.

A representative of the Michuhol-gu Countermeasure Committee said, "It has already become a word-of-mouth among auction hunters that they can acquire two units through auction for the price of one," adding, "A famous YouTuber related to auctions even broadcast this, and the Countermeasure Committee has filed a lawsuit against this YouTuber."

This content was produced with the assistance of AI translation services.