Eun Sung-soo: "We Will Ensure No Difficulties in Final Payment Loans in Real Estate Regulation Areas" (Comprehensive)

"Comprehensive Private Equity Fund Investigation as an Opportunity for Self-Adjustment" Reveals Strong Determination

[Asia Economy reporters Kangwook Cho and Minyoung Kim] Eun Sung-soo, Chairman of the Financial Services Commission, stated on the 7th that he will listen to the voices of those facing difficulties with final payment loans among people who received new apartment pre-sale contracts in areas newly regulated under the June 17 real estate measures.

Chairman Eun said in response to reporters' questions regarding the review of supplementary real estate measures by Deputy Prime Minister and Minister of Economy and Finance Hong Nam-ki, following his keynote speech at the 'Financial Company CEO Invitation Seminar' held at the Four Seasons Hotel in Jongno-gu, Seoul, "We are also paying close attention to concerns about difficulties with existing loans due to the designation of adjusted target areas under the June 17 measures," adding, "The main focus will be on ensuring there is no inconvenience or unfairness in such matters."

He also added, "Since the policy has changed, the complaints or inconveniences regarding the unexpected changes (in loan amounts) are understandable, so the policy direction is to make things proceed as expected."

The loan-to-value ratio (LTV) for housing mortgage loans on houses priced below 900 million KRW is 70% in non-regulated areas, but it is lowered to 50% in adjusted target areas and 40% in speculative overheated districts. Due to the sudden reduction in loan limits, homebuyers have protested, saying "our funding plans are being disrupted," mainly at bank branches and online.

Earlier, on the previous day, Deputy Prime Minister Hong appeared on a broadcast and said, "We will protect one-homeowners whose LTV has dropped due to inclusion in newly designated speculative overheated districts or adjusted target areas," and added, "We plan to additionally review supplementary measures on the premise that pre-contracted interim payment loans and final payment loans are part of a continuous process."

On the same day, Son Byung-doo, Vice Chairman of the Financial Services Commission, also hinted at preparing supplementary measures such as for final payment loans, saying, "We are trying to resolve this within the principle of consistently applying transitional regulations, but if there are shortcomings, we are considering additional measures."

Chairman Eun also expressed strong determination regarding the investigation of private equity funds, saying, "A full-scale investigation of private equity funds will be an opportunity for financial companies to self-correct."

He recently announced plans for a full investigation of about 14,000 private equity funds. However, the Financial Supervisory Service union pointed out that a detailed inspection of over 10,000 funds would take decades, and the industry also questioned the effectiveness of such a full investigation.

In response, Chairman Eun said, "If there was a food poisoning incident in a kindergarten, wouldn't a full investigation be the best method?" and added, "As a responsible authority, I mentioned a full investigation, and if I wanted to shirk responsibility, I would do nothing and remain silent."

He viewed that the full investigation would bring significant improvements overall, rather than focusing on whether it is physically feasible or effective.

Chairman Eun said, "If the Board of Audit and Inspection conducts an audit, we (the Financial Services Commission) will also review it again, and I believe financial companies can also self-correct or fix their errors," and rhetorically asked, "If there is a crackdown on drunk driving, people don't drive after drinking, right?"

He particularly mentioned that as the financial industry becomes digitalized, trust and security have become the most important factors.

Chairman Eun emphasized, "If this continues and consumers feel they cannot entrust money to private equity funds, not only the public but also fund companies and the financial system will all become victims," adding, "By removing some problems through a full investigation and providing reassurance, the public will have good investment opportunities and the financial industry will also develop."