[2025 Audit] "Korea Housing Finance Corporation Fails to Detect Most Cases of Jeonse Loan Misappropriation"

Apartment buildings in downtown Seoul. Photo unrelated to the article. Photo by Yonhap News Agency

The Korea Housing Finance Corporation's own detection of misappropriation of jeonse loan funds for purposes other than intended use has been found to be minimal.

According to data received from the Korea Housing Finance Corporation by Assemblyman Kang Min-guk of the National Assembly’s Political Affairs Committee on October 23, a total of 100 cases of misappropriation of jeonse loan funds for non-designated purposes occurred between 2020 and August of this year. The total amount misappropriated reached 12.2 billion won. Of these, only one case was detected by the corporation itself. The remaining 99 cases were uncovered by the Board of Audit and Inspection during an institutional audit conducted this year.

Misappropriation of jeonse loan funds for purposes other than intended use refers to cases where a loan is executed by submitting false income or lease contract documents without the intention to reside in the guaranteed property.

By year, the scale of detected misappropriation was one case in 2021 (amounting to 100 million won) and 99 cases in 2025 (amounting to 12.1 billion won), with 99% of detections concentrated this year.

By region, most cases occurred in the Seoul metropolitan area. Gyeonggi Province had the highest number with 49 cases (5.5 billion won), followed by Seoul with 25 cases (3.5 billion won), Incheon with 16 cases (1.7 billion won), Busan with 7 cases (1.1 billion won), South Jeolla Province with 1 case (200 million won), and Gwangju and Ulsan with 1 case each (100 million won each).

Regarding this, the Korea Housing Finance Corporation explained that the main reason for the increase in detected cases of misappropriation was “the lack of information sharing on guarantees among the three guarantee institutions, which resulted in missed opportunities to check for overlapping guarantees.”

Assemblyman Kang pointed out, “The Korea Housing Finance Corporation needs to strengthen verification procedures regarding suspected fraudulent loans when fulfilling guarantee obligations and respond strictly, such as by referring suspected fraudulent borrowers to investigative authorities once a year.”