[Late Response to Jeonse Fraud Measures] "Only Beating Around the Bush... Proper Loan Review and Education Needed"

Despite the government announcing several measures since the end of last year, the 피해 of Jeonse fraud is spreading nationwide. This is because the countermeasures against Jeonse fraud focus on post-incident responses rather than preventive measures. Experts agree that the current government measures are only temporary solutions and emphasize the need to establish proactive measures to reduce 피해. In particular, they point out that to prevent Jeonse fraud 피해, swift judicial investigation and strong punishment of perpetrators must follow.

A notice informing that the apartment is under investigation for a jeonse fraud case is posted on the front door of an apartment in Michuhol-gu, Incheon, where Mr. A, a victim who died from the jeonse fraud, resided.
[Image source=Yonhap News]

Hwang Do-su, a constitutional law scholar and professor at Konkuk University Law School, said in a phone interview with this paper on the 24th, "There needs to be stricter measures against Jeonse fraud, and government efforts are crucial. How can ordinary victims track the flow of funds of fraudsters? This is something the government must take the lead in investigating." He added, "To prevent Jeonse fraud fundamentally, related loans must be revised, and only those with sufficient funding capacity should be allowed to lease."

Han Moon-do, an adjunct professor at Yonsei University Graduate School of Political Science and Economics, said, "Jeonse is a useful system when people with a large sum of money cannot buy a house. Although it may disappear in the future due to lifestyle changes, it is important to prevent accidents for now." He also criticized, "Applying ointment to a wound heals it quickly, but applying saliva prolongs it. The government's policy only made noise without real action." Referring to Bolivia, which has a Jeonse system, Han said, "In some regions, if the deposit exceeds a certain percentage, ownership rights are transferred to the tenant. Our country also needs thorough and realistic measures."

They agreed that the Jeonse loan and guarantee insurance systems need revision. While the increase in Jeonse loans was only a sign during the Lee Myung-bak administration, it began to surge significantly during the Park Geun-hye administration when the guarantee limit was raised from 200 million won to 500 million won. They evaluated that tailoring loans to Jeonse caused the current unfortunate situation.

Professor Han said, "Jeonse loans involving banks with the Housing and Urban Guarantee Corporation (HUG) were so rampant that there was a saying that branch managers' personnel evaluations depended on Jeonse loans." Professor Hwang also pointed out this period, saying, "It is no laughing matter that the term 'Choinomics' (referring to former Deputy Prime Minister and Minister of Strategy and Finance Choi Kyung-hwan's economic stimulus policy) was coined."

Experts said that for Jeonse and monthly rent under a certain size, the government should take responsibility to ensure the quality of life for ordinary citizens, and the rental market culture must change. They also reiterated that although reverse Jeonse or monthly rent may increase due to risk burdens, since Jeonse is unlikely to disappear, preventing the recurrence of Jeonse fraud is of utmost importance.

Lee Eun-hyung, a research fellow at the Korea Institute of Construction Policy, said, "Because Jeonse is being abused, some may think Korea should move toward monthly rent like advanced countries, but Koreans do not dislike Jeonse. This is a time for Solomon's wisdom. Simply compensating for immediate 피해 should not be the only solution."

There were also calls for education to prevent victims from falling prey to Jeonse fraud due to ignorance. Professor Hwang said, "How many people have actually obtained a certified copy of the register, and how many can properly read it from the start? It may be difficult to prevent deliberate fraud, but that is why practical education starting from the basics is necessary."