HUG to expand housing-related guarantees to 100 trillion won annually by 2029

Interview conducted by Kang Nam-hun, president of the Busan-Ulsan-South Gyeongsang regional bureau

Korea Housing Finance & Urban Guarantee Corp. (HUG) is undergoing sweeping change. An organization that had long appeared stagnant is now moving with greater drive and ambition, and the will to hear directly from the field and solve problems is stronger than ever. The turnaround has also shown up in performance reviews: HUG recently received a B (good) rating in the government's public institution management evaluation, wiping out the D (poor) ratings it had received for three consecutive years from 2022.

HUG employees agree that the transformation traces back to the "communicative leadership" of President Choi In-ho, who took office in January. Choi is a two-term National Assembly member (Democratic Party of Korea, Busan Saha-gu Gap constituency) who served in both the 20th and 21st assemblies. During his time in the legislature he served as floor coordinator of the Land, Infrastructure and Transport Committee, building expertise in housing and real estate. Known for field-oriented communication and strong follow-through, he is driving change and innovation to make HUG a top-ranked public institution.

The Herald Business met Choi on the afternoon of June 19 at HUG's headquarters in the Busan International Finance Center in Nam-gu, Busan. "HUG will go beyond its existing guarantee functions and play a more active role in meeting the diverse needs of the public," he said. The following is an edited transcript of the interview.

— What do you see as HUG's most essential role?

Supporting the timely supply of housing is what I consider HUG's most important role. The president has repeatedly stressed the importance of expanding housing supply to stabilize residential conditions for the public. Housing supply is the starting point for residential stability. HUG is a public institution that backs housing projects through guarantees and financial support, and housing construction guarantee support is our core business — using the guarantee function to ensure that the funding needed for housing supply flows smoothly. Recently, rising construction costs and a contraction in the project financing market have left even financially viable projects struggling to secure funding. In response, HUG aims to expand housing-supply-related guarantees — covering project financing, redevelopment and pre-sale guarantees — to 100 trillion won ($64.7 billion) annually by 2029, up from an annual average of 88 trillion won in 2022–2024. In particular, the special project financing guarantee for small and midsize construction companies, launched in September last year, has already provided about 1.9 trillion won since its debut and is expected to reach its policy target of 2 trillion won ahead of schedule.

— You have said HUG will upgrade the Anshim Jeonse app as a jeonse fraud prevention measure. What exactly does that involve?

The Anshim Jeonse app, launched in February 2023, is HUG's flagship platform for preventing jeonse fraud. Before signing a jeonse contract, tenants can use it to check a property's market price, the jeonse-to-value ratio, eligibility for guarantee enrollment and landlord information — helping them determine whether the deposit amount is reasonable and whether the property is safe to rent. While post-incident relief matters, prevention is paramount when it comes to jeonse fraud, and the app serves as a safety valve that lets tenants spot warning signs before signing. Starting in September, the app will evolve into a one-stop platform for jeonse contracts. Information related to jeonse contracts has been scattered across multiple agencies, forcing tenants to check each source individually. To fix that, HUG plans to integrate 15 categories of data held by six agencies — including the Ministry of Land, Infrastructure and Transport, the Supreme Court, the National Tax Service and the Korea Real Estate Board — covering officially assessed prices, national and local tax arrears, and loan and credit card delinquency records, all accessible through the app.

— Since taking office you have visited construction sites across the country and placed particular emphasis on fieldwork. Why?

The management principle I hold most dear is that the answer is in the field. No matter how good a policy or system looks on paper, it means nothing if it does not work in practice. That is why, since taking office, I have been visiting housing construction sites, unsold-unit sites and other locations across the country. In May I visited the Suwon Imok district — the largest project financing guarantee project in the Greater Seoul area — and the Pyeongtaek Brain City advanced mixed-use residential complex to check on progress and hear about difficulties on the ground. Sites were struggling considerably due to rising construction costs and a tightening project financing market, and I intend to provide whatever tailored financial support is needed to keep projects moving. At a youth safe-housing site I visited in April, I heard firsthand about the obstacles arising during project execution, and that visit became the catalyst for working with relevant agencies to develop regulatory improvements. The same was true at a construction rental project site in Gwangju, where listening directly to industry views and reviewing the need for regulatory reform allowed us to establish more rational guarantee standards.

— HUG has been cutting guarantee fees and expanding project financing guarantees to help revive the construction sector and boost housing supply. Many worry about the risks involved.

I believe the risk is manageable. We are actively pursuing the support needed to revive the construction sector and expand housing supply, but we are doing so alongside rigorous screening and risk management. Cutting guarantee fees reduces the financial cost burden on developers, helping projects proceed normally — and the more stably a project progresses, the lower the likelihood of a stoppage or default, which ultimately benefits guarantee risk management over the long term. Expanding project financing guarantees is likewise not indiscriminate support; we are providing guarantees primarily to projects that have passed close scrutiny of their viability and pre-sale prospects. Notably, since we expanded project financing guarantees in October 2023, not a single guarantee incident has occurred. Given that track record, I am confident that any additional risk from extending the support period through June 2027 remains fully manageable.

— HUG ran large deficits for three to four years before returning to profit last year. What is the financial outlook for this year?

In responding to the jeonse fraud crisis, HUG repaid enormous sums of jeonse deposits on behalf of victims, fulfilling its public role. That process took a financial toll, but last year a decline in jeonse guarantee incidents and sustained efforts to improve our financial structure allowed us to return to profit — above all, the result of our employees working together toward financial recovery. This year's operating environment is not easy. But we are treating this year as the first year of a fundamental financial overhaul, and we will focus our energy on diversifying our revenue base, strengthening bond recovery capacity and building a more stable, sustainable financial structure.

— The president recently mentioned at his first-anniversary press conference the need to adjust the jeonse-to-value ratio for jeonse guarantees. What is your view?

I believe adjusting the jeonse-to-value ratio to a reasonable level is a necessary step to proactively manage guarantee risk and establish a sound lease market order. I also expect it to have a positive effect in preventing risky jeonse contracts from being signed in the first place. What matters most is improving the system rationally while minimizing market disruption. In close consultation with the government, we are reviewing reform options that minimize inconvenience for genuine tenant demand while blocking abnormal transactions such as jeonse fraud and no-capital gap investment.

— AI transformation has become a major priority for public institutions. What is HUG doing on that front?

I see AI transformation — or AX — not as an option but as a core challenge that will determine the competitiveness of public institutions. We are using AI not merely as a tool for automating tasks but as a key means of predicting residential risk and protecting the public's housing security. The Lee Jae-myung administration is pursuing AI adoption in the public sector as an important national policy agenda, and HUG is accordingly driving an organization-wide AX to shift all of our operations toward an AI-centered model. Since taking office I have set the goal of making HUG synonymous with AX, and we are pushing AI adoption across the board — from guarantee screening and risk management to bond recovery. Our ultimate aim is to transform HUG through a company-wide AI overhaul into South Korea's leading AI-based residential finance platform — the "Zero Surprise AI Native HUG" — one that anticipates residential risk before it materializes and protects the public's housing security. We are also pursuing high-value new data services for the public, including AI-powered market price information for villa-type housing and a HUG-certified premium jeonse program.

— Unsold units in regional markets remain a persistent problem. What role is HUG playing in addressing that?

Unsold units are one of the biggest challenges facing regional housing markets right now. As of April, the number of unsold homes nationwide stood at about 65,000 units, with roughly 30,000 of those being post-completion unsold units — what the industry calls "malignant" unsold inventory. Regional markets account for about 73 percent of the total, making the situation in those areas serious. This month, Sasang-gu in Busan and Jung-gu in Daejeon were added to the list of unsold-unit management zones, and the prolonged buildup of unsold inventory in regional areas is now cascading into cash-flow problems for construction companies and broader regional economic stagnation. For pre-completion unsold units, HUG is providing support through its unsold-unit safe buyback program, under which HUG purchases unsold units while they are still under construction and allows the construction company to buy them back after completion. We are on track to deliver the targeted support of 2.4 trillion won covering 10,000 units without disruption. For post-completion unsold units — the so-called malignant inventory — we are actively deploying CR-REIT mortgage guarantees, which support the funding that CR-REITs need to purchase those units, helping absorb the backlog of unsold supply in the market and easing the financial burden on construction companies.

— As a public institution that relocated to Busan, what are HUG's key initiatives this year for coexisting with and contributing to the local community?

Because the Lee Jae-myung administration is pursuing balanced national development as a core policy agenda, HUG is also placing priority on a range of coexistence policies that can make a tangible difference to the regional economy. First, we are working to expand hiring of local talent. Over the past five years HUG has hired local talent at an average rate of 33 percent, exceeding the statutory minimum of 30 percent. This year we are going a step further: even in recruitment categories with five or fewer hires — which are normally exempt from the mandatory ratio — we plan to hire local talent at the 30 percent level without exception. We are also pursuing regulatory reform to expand local procurement and plan to make a "local procurement pre-screening" mandatory, requiring advance review of whether local firms can participate before any tender or contract is initiated. In addition, we are strengthening efforts to build a growth foundation for local businesses. This year, as the first public institution relocated to a regional city to do so, we held a roundtable with local IT companies, introduced 15 billion won worth of information technology projects, and provided guidance on forming consortiums and participating in bids. We are also launching a new "HUG-style subcontracting co-payment program" to help revitalize the local construction sector.

— HUG has declared its ambition to evolve beyond a guarantee institution into a public platform for housing supply and residential finance.

HUG has long supported housing supply and residential stability by providing the guarantees that housing developers and the public need. But to respond to the changing residential environment and the diverse demands of the public going forward, we need to go beyond the existing guarantee function and play a more active role. Evolving into a public platform for housing supply and residential finance means transforming HUG into an institution that fulfills whatever role is needed across the entire process — from the moment housing is supplied to the moment residents are living stably in their homes. In particular, we will expand beyond financial support to take on a direct role in supplying quality rental housing.

■ Profile: Choi In-ho

Born in Changnyeong, South Gyeongsang Province, in 1966, Choi graduated from Dongin High School in Busan in 1985 and earned a bachelor's degree in political science and diplomacy from Pusan National University in 1992, followed by a master's degree from the same institution in 2001. He completed doctoral coursework there in 2010. He served in the presidential secretariat as deputy spokesperson in 2005 and as domestic press secretary in 2006. Choi was elected to the National Assembly in 2016 as a member for Busan Saha-gu Gap (20th Assembly) and re-elected in 2020 (21st Assembly), also serving as chief spokesperson of the Democratic Party. In 2017 he served as a supreme council member of the Democratic Party of Korea. In 2022 he served as the Democratic Party's floor coordinator on the National Assembly's Land, Infrastructure and Transport Committee. He became president of HUG in 2026.