[2020 National Audit] HUG Anshim Jeonse Loan That Requires Watching Bankers' Reactions First

[Asia Economy Reporter Yoo In-ho] #Mr. A visited a bank to apply for the Anshim Jeonse Loan, but the person in charge explained that the house he applied for was likely to be rejected in the screening process, so it would be better not to sign the contract.

However, when he inquired with the Housing and Urban Guarantee Corporation (HUG), he received a response that there was no problem with the house, and after many twists and turns, he visited another bank and succeeded in obtaining the Anshim Jeonse Loan. The differing explanations from each bank and person caused stress throughout the process, and it was a dreadful time of anxiety over possible rejection.

Jin Sun-mi, a member of the National Assembly Land, Infrastructure and Transport Committee from the Democratic Party of Korea, monitored HUG’s civil complaint status and online reviews of the Anshim Jeonse Loan, revealing that due to the entrusted banks’ lack of understanding of the product and high barriers, citizens are experiencing difficulties during the application process.

The Anshim Jeonse Loan system is a Jeonse financial product in which HUG takes joint responsibility for the tenant’s Jeonse deposit return obligation (Jeonse Deposit Return Guarantee) and the bank’s repayment of the Jeonse loan principal and interest (Jeonse Loan Guarantee). Tenants can pay a partial guarantee fee to not only eliminate the risk of deposit return but also secure the Jeonse loan at a low interest rate.

However, even though applicants visited entrusted banks with the required documents as guided by HUG, difficulties arose because each bank did not properly recognize the related information, causing hardships during the subscription process.

Online, there are shared stories of failed attempts to subscribe to the Anshim Jeonse Loan, successful cases after numerous trials and errors, and even humorous but unfortunate accounts that applicants must appease bank clerks to avoid rejection.

In fact, HUG’s civil complaint records include cases where alternatives were suggested after frustrations in the subscription process. Due to the lack of easy and detailed explanations about the process, tenants had to rely on unverified online experiences.

Since HUG’s Anshim Jeonse Loan product is operated with a public interest purpose, commercial banks entrusted with the task inevitably feel burdened due to the many documents to handle and low profitability. In this process, explanations vary by bank and staff, causing applicants to struggle obtaining the necessary documents and to have to re-inquire with HUG before finally succeeding in their application.

The problem is that the number of guarantees and guarantee amounts for the Anshim Jeonse Loan have been increasing every year. According to the Housing and Urban Guarantee Corporation, as of September this year, the number of guarantees reached 91,707 cases, and the guarantee amount totaled 13.7812 trillion KRW.

Given the nature of Jeonse financial products, which require many documents and complicated procedures, there are concerns that complaints related to somewhat difficult procedural explanations and entrusted banks’ lack of awareness will continue to be raised among the general public.

Assemblywoman Jin said, “Although tenants have found good houses by putting in the effort, entrusted banks’ lack of knowledge about the system is causing them pain,” and added, “The Housing and Urban Guarantee Corporation should prepare an easy-to-understand Anshim Jeonse Loan operation manual, and entrusted banks should establish procedural alternatives that they can fully understand.”