Banks grow frustrated as regulator leaves exception decisions to lenders
Confusion and frustration are growing across the banking sector after financial authorities left banks to determine when to grant exceptions in some loan reviews under the latest comprehensive real estate finance measures, industry officials said Tuesday. The Financial Services Commission (FSC) said the approach is designed to allow lenders to take borrowers’ individual circumstances into…
Frustration is mounting within the banking sector after financial regulators opted to leave the decision-making process for granting exceptions in loan reviews to individual lenders, industry officials reported on Tuesday. The Financial Services Commission (FSC) claims this approach enables lenders to consider each borrower's unique situation.
However, banks contend that this policy essentially shifts the responsibility of making such judgments onto them. They also worry that worries about accountability for erroneous assessments might drive lenders to tighten their standards even further.
The FSC, the country's principal financial regulator, unveiled the package on Thursday. It proposed restricting jeonse loan guarantees for single-home owners in the Seoul metropolitan area and other regulated zones, impacting homeowners who rent out properties they or their spouses do not personally reside in. Such cases would be categorized as speculative investments. Jeonse is a distinctive Korean housing rental system where tenants pay a substantial upfront deposit.
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