HUG President "Considering Revoking Malicious Landlord Qualifications and Lowering Collateral Recognition Ratio" [2024 National Audit]

The Housing and Urban Guarantee Corporation (HUG) is considering revoking the rental business qualifications of malicious landlords and lowering the collateral recognition ratio for the Jeonse deposit return guarantee.

Yoo Byung-tae, President of the Housing and Urban Guarantee Corporation (HUG) (second from the left), is responding to a lawmaker's question at the National Assembly Land, Infrastructure and Transport Committee's audit held on the 16th. / Photo by Yonhap News

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On the 16th, at the National Assembly Land, Infrastructure and Transport Committee's audit, HUG President Yoo Byung-tae responded to a question from Jeong Jeong-sik, a member of the People Power Party, who emphasized the need to improve the qualifications of malicious landlords, saying, "We will consult with the Ministry of Land, Infrastructure and Transport and discuss amendments to the law."

Regarding the subscription requirements for those suspected to be malicious landlords, he said, "We plan to introduce within this year a measure to additionally screen landlords who have subscribed to more than 50 Jeonse deposit return guarantees."

According to the Jeonse guarantee subrogation payment and financial status secured by Lee Yeon-hee, a member of the Democratic Party of Korea, HUG's Jeonse guarantee subrogation payment amount was around 2.6 billion KRW in 2016 but increased to 924.1 billion KRW in 2022 and 3.5544 trillion KRW in 2023. During this period, the bond recovery rate decreased from 53.8% to 14.3%.

From 2020 until August of this year, the total amount subrogated by HUG reached 8.1638 trillion KRW. Of this, only 12.7301 trillion KRW has been recovered. The subrogation payment amount is expected to approach 4 trillion KRW by the end of this year.

Regarding this, President Yoo explained, "There is a 2 to 3-year time lag until bond recovery," adding, "Since last year, the rapid increase in Jeonse fraud has caused the amount of unrecovered funds to rise."

On the claim that the collateral recognition ratio for the Jeonse deposit return guarantee should be lowered further, he said, "About 77% of Jeonse guarantee accidents occurred in the 90% to 100% collateral recognition ratio range," and added, "Since it was lowered to below 90% from May last year, that measure alone should arithmetically reduce accidents by 77%."

President Yoo also hinted at reviewing additional adjustments to the collateral recognition ratio. He said, "We will observe the situation at 90% and consider whether to further (lower) adjust the collateral recognition ratio."

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