[1mm Financial Talk] Aftermath of Jeonse Fraud... Financial Supervisory Service Closely Monitoring Secondary Financial Sector

Victims of jeonse fraud held a press conference on the 18th in front of the Presidential Office in Yongsan-gu, Seoul, urging the establishment of measures to address jeonse fraud damage. Photo by Dongju Yoon doso7@

The Financial Supervisory Service (FSS) has stepped up close monitoring of secondary financial institutions such as mutual finance cooperatives in relation to damages caused by jeonse fraud. This is because many of the financial institutions holding mortgage rights on houses targeted by jeonse fraud are concentrated in secondary financial sectors like credit unions, Nonghyup, Suhyup, and Saemaeul Geumgo.

According to the financial sector on the 21st, a senior official from the FSS recently made calls to the heads of credit operations at various mutual finance central associations, specifically requesting their cooperation. Previously, the FSS had asked each financial sector to apply for postponement of sales or extension of sales deadlines regarding cases where the claims of victims of jeonse fraud in Michuhol-gu, Incheon, were being sold or auctioned.

In particular, since jeonse fraud damages are concentrated in villas or small-scale apartments, most mortgage rights are held by secondary financial institutions. The FSS also discussed support measures for victims of jeonse fraud with banks, mutual finance central associations, and various financial sector associations the day before. At this meeting, it was decided to activate a "close monitoring system" for the sale and auction status of houses involved in jeonse fraud. According to the FSS, out of a total of 32 cases with auction dates on that day, 28 were postponed and 4 were passed over.

The FSS’s close monitoring is a response to the fact that the jeonse fraud issue has emerged as a national concern. As jeonse fraud damages have spread nationwide and some victims have taken extreme measures, even President Yoon Suk-yeol has taken an interest in the matter. At the Cabinet meeting on the 19th, President Yoon instructed measures such as suspending or postponing auction schedules related to jeonse fraud damages. Choi Sang-mok, Senior Secretary for Economic Affairs at the Presidential Office, also expressed his intention, stating, "We plan to monitor in real time whether auctions are being suspended."

With the FSS stepping up close monitoring, mutual finance sectors have also rushed to announce countermeasures. Credit unions announced the day before that they would postpone public and private sales of houses targeted by jeonse fraud and adjust interest rates for victims with jeonse loans. They also plan to provide maximum support within the scope recognized by government policies if victims win the bid for the house they reside in. Suhyup, Nonghyup, and Saemaeul Geumgo have introduced similar measures.

However, managing their soundness remains a challenge. In particular, credit unions, Nonghyup, Suhyup, and Saemaeul Geumgo operate independently by each cooperative or credit union, meaning that the respective cooperative must bear the risk of delinquency and other soundness risks. Additionally, many loan companies are also known to hold mortgage rights on houses involved in jeonse fraud, making their cooperation another challenge.

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