The Board of Audit and Inspection detected 141 cases of suspected fraud involving loans based on false lease agreements during a regular audit of the Korea Housing Finance Corporation (HF). The Board confirmed that fake tenants and landlords colluded to create disguised contracts and obtained loans using either exclusive guarantees from guarantee institutions or duplicate guarantees.
On the 31st, the Board of Audit and Inspection released a report detailing these audit results. The total amount of the 141 loans detected in the audit amounts to approximately 15.9 billion won.
According to the Board of Audit, guarantee institutions including the Korea Housing Finance Corporation (HF), the Korea Housing & Urban Guarantee Corporation (HUG), and Seoul Guarantee Insurance failed to share mutual guarantee information, preventing them from confirming duplicate guarantees in advance. The lack of system integration between institutions became a loophole for fraud.
The recent audit pointed out that there are elements disadvantageous to subscribers in the operation of the housing retirement pension system. It was noted that the main variables used in calculating the monthly payment amount for the housing retirement pension were set unfavorably for subscribers.
For instance, only the nationwide housing price index with low growth rates was reflected in the calculation of housing price increase rates, while the actual transaction price index, which better reflects actual price trends, was not taken into account. Additionally, the interest rate used for pension calculations applied the certificate of deposit (CD) rate that is hardly used in the market.
The Board of Audit analyzed that if relevant standards were realized, the monthly payment amount for an average subscriber (72 years old) residing in a dwelling worth 400 million won could increase from 1.34 million won to 1.4 million won.
Additionally, the Board emphasized the need for system improvements, pointing out that the contributions made by banks to the Housing Finance Credit Guarantee Fund for securing funds are ultimately passed on to borrowers through additional charges on mortgage loans.
The Board of Audit and Inspection requested further investigations into the charges of fraudulent loans and guarantees against the Korea Housing Finance Corporation (HF) and notified the Financial Services Commission to prepare a plan to reduce the guarantee fund contribution rate.