HUG launches public auction operations, first among guarantee agencies

Korea Housing Finance Corporation (HUG) announced Tuesday that it signed a public auction agency MOU with Korea Asset Management Corporation (KAMCO) on Monday and successfully launched public auction operations — the first guarantee agency in the country to do so.

The move follows the enactment in March of an amendment to the Housing and Urban Fund Act granting HUG the authority to conduct public auctions. The two agencies have since carried out preparatory work toward introducing the service, and Monday's MOU signing formally establishes their cooperation as full-scale auction operations get underway.

HUG said the introduction of public auctions will diversify its bond recovery methods beyond the existing court-led auction system, with the aim of improving recovery rates and strengthening financial soundness. Properties acquired through the auctions will also be purchased under the Deundeun Jeonse program and supplied as public rental housing, contributing to relief from the jeonse shortage.

Public auctions are expected to cut bond recovery time by more than half compared with court auctions, as they offer faster sale dates and shorter bidding cycles and allow bids to be submitted through KAMCO's online auction platform OnBid.

The auctions will initially target properties belonging to so-called habitual defaulters — landlords repeatedly failing to meet their obligations. HUG plans to start with a pilot batch of roughly 200 properties and gradually expand the volume of auction referrals.

Habitual defaulters are landlords whose names have been made public after meeting legal criteria: defaulting on debt two or more times over three years, carrying subrogation debt of 200 million won (about $129,000) or more, or having a real estate provisional attachment filed against them.

At Monday's signing ceremony, HUG President Choi In-ho said the agency would work closely with KAMCO to sharply reduce the time needed for bond recovery and improve recovery performance. "We will more faithfully fulfill the corporation's duty to ensure residential stability for the public through the active supply of Deundeun Jeonse housing," he added.