FSS seeks voluntary home auction, sale delays for housing fraud victims

The Financial Supervisory Service [Photo by Kim ho-young]

The South Korean government set up measures to delay auctions or sale of homes that had been targets of housing fraud, which has become social issue recently due to a string of suicide deaths of the victims.

The measures are aimed at protecting victims of jeonse deposit fraud in Incheon, near Seoul, from losing their current residence. Jeonse is a popular form of housing lease in Korea, where tenants pay a lump sum deposit instead of monthly rent. In recent years, a growing number of cases of jeonse fraud have been reported, leaving victims facing financial ruin and eviction from their homes.

The Financial Supervisory Service, in collaboration with the country’s banking industry, has proposed a plan to delay the auction and sale of homes occupied by jeonse fraud victims for at least six months. This is in addition to voluntary auction delays already implemented by the banking industry.

The FSS will provide banks and other financial institutions handling mortgage loans with the addresses of jeonse fraud victims’ homes obtained from the land ministry, allowing them to track the progress of auctions and offer further support if necessary.

Financial institutions that have used homes affected by jeonse deposit fraud as collateral for loans plan to postpone the commencement of auction procedures if the victim wishes to do so. Banks also plan to postpone sales if the auction has already begun, and to request cooperation for the postponement of auctions from purchasing institutions if they have already sold the ownership to a third party.

The FSS plans to issue an opinion letter to the financial industry on Wednesday to ensure that voluntary measures by financial institutions to postpone auctions and sales are carried out quickly.