Jeonse deposits that the Korea Housing Finance Corporation paid out on behalf of landlords and has yet to recover have reached 455.9 billion won ($328 million), as guarantee defaults mount. While the scale of defaults has grown along with an expansion in guarantee supply, the recovery rate on those claims has stayed in the 10% range, raising concerns that the agency's loss burden could widen.
According to data from the office of Rep. Park Sung-hoon of the People Power Party, a member of the National Assembly's National Policy Committee, the outstanding unrecovered balance from subrogation payments under the agency's Jeonse Jikim Guarantee stood at 455.9 billion won as of the end of July. Under the product, the agency pays a tenant's jeonse deposit — a lump-sum deposit lease — when a landlord fails to return it, then seeks to recover the money from the landlord.
Guarantee defaults have climbed rapidly in recent years. Annual cases jumped from 51 in 2022 to 486 in 2023 and 1,312 in 2024, before registering 959 last year. Part of that reflects a more than threefold rise in guarantee supply, from 3.065 trillion won in 2022 to 10.4977 trillion won last year, but the ratio of default amounts to outstanding guarantees also rose over the same period, to 0.84% from 0.26%.
The amount the agency paid to tenants on landlords' behalf has swelled as well. Subrogation payments rose from 6.1 billion won in 2022 to 84 billion won in 2023 and 227.5 billion won in 2024, a roughly 37-fold surge in two years. The agency paid out another 167.6 billion won last year, and payments through July of this year reached 87.3 billion won.
The problem is how slowly the agency recovers the money afterward. The recovery rate on principal was 10.19% last year and has hovered around 10% every year since 2022. As of July, 840 claims worth 144.8 billion won had gone uncollected for more than two years after subrogation. Of those, 130 claims worth 20.9 billion won had been outstanding for three years or longer. "Rather than focusing only on expanding guarantee supply, the agency needs to strengthen its management system to screen out default risks and risky landlords in advance and to pursue claims to the end after subrogation payments," Park said.
