Korea Housing Finance Corporation to Write Off 35% of Principal for Jeonse Fraud Victims Who Repay Remaining Debt in Lump Sum

Special Debt Adjustment Campaign to Run for Four Months Starting July 30

Expanded Principal Reduction for Faithful Repayers

Up to 80% Reduction for Youth and Small Business Owners

Early Termination of Joint Guarantee Debts to Support Economic Recovery

Korea Housing Finance Corporation is launching a special debt adjustment initiative to reduce the debt burden on customers who are unable to repay jeonse loans and other obligations, and to support their economic recovery. If victims of jeonse fraud repay their remaining debts in a lump sum, 35% of the principal will be written off, while youth and small business owners can receive up to 80% reduction in principal.

On July 28, Korea Housing Finance Corporation announced that it would conduct the "Special Debt Adjustment Campaign for Housing Guarantees" from July 30 to November 30. This campaign targets subrogation receivables that the corporation acquired after repaying customers’ jeonse loan debts on their behalf to financial institutions. The campaign focuses on expanding incentives for customers willing to repay and enhancing tailored support for socially vulnerable groups such as victims of jeonse fraud, youth, and small business owners.

Customers who have entered into an installment repayment agreement for subrogation receivables and have repaid at least 10% of the agreed amount will receive a 25% reduction of the principal on the subrogation receivable—calculated at the time of agreement—if they pay off the remaining debt in a lump sum during the campaign. Subrogation receivables refer to claims that the corporation has against customers after paying off their loans to financial institutions on their behalf.

Active debtors who apply for debt adjustment within three years of the corporation’s subrogation payment date will be eligible for a 10% reduction in the principal of their subrogation receivable. The subrogation payment date refers to the day the corporation repaid the debt to the financial institution on behalf of the customer.

Benefits for customers who faithfully repay charge-off receivables will also be expanded. Previously, only those who had repaid debts for over a year could receive benefits, but now customers who have repaid for at least six months will be eligible. The reduction standard has also been expanded from 13% of the remaining installment amount to 20% of the initial installment agreement amount. Charge-off receivables refer to non-performing loans that are considered difficult to collect and are recognized as accounting losses.

Support for victims of jeonse fraud will be strengthened as well. The corporation currently operates a special debt adjustment program for these victims, allowing them to repay debts in installments over up to 20 years with no interest. Victims already on an installment plan who pay off their remaining debts in a lump sum during the campaign period will have 35% of the principal written off.

If a spouse or another party has acted as a joint guarantor in order to receive preferential jeonse guarantee limits, the joint guarantee relationship will be immediately terminated once the beneficiary has repaid up to the preferential guarantee limit. The aim is to help victims and their families recover economically and not remain tied to joint guarantee obligations for an extended period. The extent of principal reduction for youth, small business owners, and minor debtors will also be increased. If customers holding charge-off receivables are youth, small business owners, or minor debtors, an additional 30 percentage points will be added to the existing principal reduction rate.

The maximum principal reduction rate will also be raised from the current 70% to 80%. For example, a youth or small business owner who was previously eligible for a 50% reduction in principal under the existing guidelines can now receive up to an 80% reduction with the additional benefits. Eligibility requirements for large families will also be eased. While previously only households with two or more minor children were eligible for a 70% principal reduction, now households with one or more minor children, including fetuses, will also receive benefits. Kim Kyunghwan, President of the corporation, stated, "This campaign has been prepared to help customers who are willing to repay, as well as victims of jeonse fraud, youth, and small business owners—the socially vulnerable—quickly restore their credit despite the difficult economic situation," adding, "As an institution that supports inclusive finance for the common people, we will continue to fulfill our social responsibility and actively implement socially responsible finance."

This content was produced with the assistance of AI translation services.