[Asia Economy Reporter Kwangho Lee] Financial authorities have instructed commercial banks to take necessary measures, such as loan recovery, against borrowers who fail to comply after receiving conditional mortgage loans.
According to the financial sector on the 18th, the Financial Supervisory Service conveyed this requirement during a meeting with loan officers from commercial banks on the 13th.
The government has introduced regulations such as disposal condition agreements, move-in condition agreements, and prohibitions on additional home purchases to provide mortgage loans only to genuine buyers.
The disposal condition agreement refers to a requirement for a single-homeowner purchasing a new home in a regulated area with a mortgage loan to agree to dispose of their existing home and move into the new home within two years.
It was introduced on September 13, 2018, through the "Housing Market Stabilization Plan," and borrowers who took out loans since then have been reaching their agreement deadlines one by one since September last year, two years later.
The move-in condition agreement requires a non-homeowner who receives a mortgage loan to purchase a home exceeding 900 million KRW in a regulated area to move into that home within two years.
The additional home purchase prohibition agreement means that funds borrowed for living stabilization purposes through a mortgage loan must not be used for home purchases.
If a breach of the agreement is confirmed, the borrower must immediately repay the loan, and the account will be classified as delinquent. The breach is recorded with credit information agencies regardless of repayment status, restricting bank loans for three years.
However, at bank branches, there are often cases where customers resist citing transaction delays, or employees fail to respond actively for customer management reasons, resulting in management measures not being implemented promptly.
A Financial Supervisory Service official said, "We urged banks to apply the rules as a principle."
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