Real Estate PF Fees Reduced from 32 to 11 Types... Penalty and Maturity Extension Fees Abolished

FSS Inspects Top 17 Companies by New PF Issuance

It has been found that real estate project financing (PF) fees have been simplified from a maximum of 32 types to 11 types following the introduction of best practice guidelines by financial authorities. Penalty fees and maturity extension fees, which had previously exacerbated market confusion, have virtually disappeared.

On May 18, the Financial Supervisory Service (FSS) held a meeting with 17 financial institutions and association officials to discuss the results of the first quarter 2026 inspection on the management of real estate PF fees. The FSS had introduced the “Real Estate PF Fee Best Practice Guidelines” to each sector in January last year, and this inspection targeted the top 17 companies by new PF issuance in each sector.

According to the FSS inspection, the types of PF fees, which had reached up to 32 prior to the establishment of the best practice guidelines, have now been consolidated and simplified into 11 types. The FSS explained that the fee structure has been standardized, thereby improving comparability and transparency.

In particular, the amount collected for penalty fees on newly issued PF transactions dropped from 6.4 billion won in 2024 to zero since February last year. Likewise, collections for maturity extension fees, which had amounted to 9.3 billion won in 2024, have ceased since February last year. This was the result of the FSS limiting the imposition of fees to actual compensation for services rendered under the best practice guidelines.

Information provision to borrowers and internal controls have also been strengthened. All of the companies subject to inspection—100%—reflected the PF fee best practice guidelines in their internal regulations. The rate of preparing and delivering service execution plans was 88%, and the rate for preparing and delivering result reports stood at 82%. Additionally, 94% had established a service execution history management system.

Internal control mechanisms to prevent illegal activities and unfair business conduct by PF staff have also been improved. Of the companies inspected, 76% had established separate internal control standards related to PF fees, and 88% had set up systems to prevent unfair business practices.

However, some shortcomings were identified. Some companies collected fees permitted under the best practice guidelines but used pre-integration terminology, or only listed the fee names in loan agreements without providing definitions or detailed explanations. Cases were also noted where service execution plans and result reports were prepared only in form or not delivered at all. There were also deficiencies in systems for monitoring the legal maximum interest rate for PF fees and in internal control frameworks specialized for PF work.

Kim Ukbae, Deputy Governor for Consumer Protection at the FSS, stated, "Rational management of PF fees is crucial to enhance fairness, transparency, and trust in real estate PF finance," and added, "With the uncertainty in the PF market increasing due to construction cost hikes related to the recent Middle East situation, it is important to maintain a reasonable fee structure alongside smooth capital supply from financial institutions." He further urged, "Please ensure the substantive internalization of the best practice guidelines through regular employee training and improvements to internal control procedures."

The FSS plans to continue monitoring the appropriateness of PF fee management at financial institutions and the risk management systems for real estate PF going forward.

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