LTV and DSR Regulations for Jeonse Fraud Victims to Be Eased for One Year

Support for Loans with Interest Rates in the 3% Range
Loan Delinquency Registration Grace Period
Loan Repayment in Installments for up to 20 Years

The financial authorities have introduced measures such as a one-year relaxation of the loan-to-value ratio (LTV) and debt service ratio (DSR), as well as preferential interest rates for special Bogeumjari loans, to support victims of jeonse fraud.

On the 1st, the Financial Services Commission announced the implementation of a financial support program for victims of jeonse fraud in accordance with the enforcement of the "Special Act on Support for Victims of Jeonse Fraud and Housing Stability."

First, to ensure that victims of jeonse fraud can continue to use normal financial services even if they fail to repay their loans on time, financial institutions handling jeonse loans, such as banks, will support the postponement of delinquency information registration.

Unpaid jeonse loan debts can be repaid in installments without interest for up to 20 years by entering into installment repayment agreements with guarantee institutions such as the Korea Housing Finance Corporation and SGI Seoul Guarantee. If immediate repayment is difficult, a repayment deferral of up to two years is also possible.

Regulations such as LTV and DSR will be temporarily relaxed for one year. For mortgage loans up to 400 million KRW, DSR and debt-to-income ratio (DTI) will not be applied, and the LTV will be eased from 60-70% to 80% (in non-regulated areas) for general mortgage loans. For foreclosure fund loans, the limit will be relaxed from "70% of the appraised value or the lower of the appraised value and the winning bid price" to 100% of the winning bid price (across all areas).

Preferential interest rates for special Bogeumjari loans will also be provided. Victims of jeonse fraud can purchase new homes at an annual interest rate in the 3% range through the special Bogeumjari loan. Additionally, victims who used other mortgage loans at high interest rates to bid on jeonse fraud victim homes before the enactment of the special law can refinance with the special Bogeumjari loan without prepayment penalties.

Those with credit ratings in the bottom 20% or who are basic livelihood security recipients or near-poverty class and have difficulty securing living expenses can use the microfinance "vulnerable group self-reliance fund loan" at an interest rate of 3% per annum.

On the 9th, officials were busy moving through the corridor of the Financial Services Commission at the Government Seoul Office in Jongno-gu, Seoul, where financial authorities decided to include mortgage loans (Judaemae) in the 'debt refinancing' infrastructure set to launch in May by the end of the year. Financial authorities explained that the purpose is to reduce the interest burden on mortgage loans by establishing a debt refinancing platform that allows users to compare financial sector loan interest rates at a glance and switch loans easily. Photo by Dongju Yoon doso7@