Due to Banking Sector Concerns, Future Registration System Fully Revised... 'Mobile Mortgage Loans' Continue

Meeting Held on the 16th Between the Court Administration Office, Korea Federation of Banks, Internet Banks, and Commercial Banks
Court Administration Office to Present Alternatives Before the Lunar New Year Holiday

The introduction of the future registration system by the Court Administration Office is expected to enable mobile non-face-to-face mortgage loans, which were almost blocked. There were many concerns that if the future registration system, originally scheduled to be introduced on the 31st of this month, is implemented, it would become virtually impossible for home buyers to receive non-face-to-face mortgage loans. The Court Administration Office has decided to fully revise the future registration system in response to these concerns from the banking sector.

According to the financial sector on the 17th, the day before, the Court Administration Office, the Korea Federation of Banks, and the banking sector held a meeting to discuss potential consumer damages expected from the introduction of the future registration system.

The future registration system, which the Court Administration Office is promoting, is a platform that allows both ownership transfer registration and mortgage registration to be processed entirely via mobile during the housing transaction process. However, problems arose as it forced the unification of either all non-face-to-face or all face-to-face methods for ownership transfer registration between the buyer and seller, and mortgage registration between the bank that provided the mortgage loan and the buyer. Previously, when the buyer and seller paid the balance, a judicial scrivener would visit the registry office to apply for ownership transfer registration face-to-face, and based on this, the bank would perform mortgage registration online. In other words, because face-to-face and non-face-to-face methods were mixed, it was possible for buyers to receive mortgage loans non-face-to-face.

However, once the future registration system is introduced, if the seller opposes non-face-to-face ownership transfer registration, the buyer must receive the mortgage loan face-to-face at the bank counter without exception. From the seller’s perspective, they can simply handle the complicated ownership transfer registration by paying about 100,000 won in judicial scrivener fees, so there is little incentive for the seller to directly perform ownership transfer registration via mobile. Because of this, concerns have arisen that, in effect, non-face-to-face mortgage loans for buyers will be blocked.

In particular, internet banks that operate 100% non-face-to-face without bank counters were facing significant concerns about customer attrition. Commercial banks also began suspending mortgage loan products for applications received after the 31st due to the Court Administration Office’s announcement of the future registration system introduction.

In response, the banking sector conveyed through the meeting that they want to allow the mixed use of face-to-face and non-face-to-face methods as before even after the introduction of the future registration system, or to postpone the introduction of the system.

The Court Administration Office plans to prepare alternatives before the Lunar New Year holiday in response to the banking sector’s concerns. A Korea Federation of Banks official said, "KB Kookmin Bank and Hana Bank attended as representatives from internet banks and commercial banks to effectively communicate the banking sector’s concerns," adding, "The Court Administration Office also plans to reorganize the system by preparing measures such as a grace period to prevent consumer damages."

An internet bank official said, "Internet banks operate by offering lower interest rates than commercial banks, but if the method changes to face-to-face, consumers’ choices may be limited," and added, "We conveyed our position well to minimize inconvenience to customers."