HUG launches financial guarantee for public housing sales under direct settlement with LH

Korea Housing & Urban Guarantee Corporation (HUG) said it has launched a financial guarantee product to support public housing sales under the direct settlement method among public housing projects jointly carried out by the private sector and Korea Land & Housing Corporation (LH) in 7month 13day. From an investor's perspective, this is a measure that eases the financing burden on construction companies.

Under the direct settlement method, a construction company first arranges the project cost to complete the housing, and then receives settlement of the construction cost from LH. This guarantee product was designed as a model specialized for this structure.

The guarantee limit is applied differently by housing type. The general public sales type is supported up to 80percent of total project cost, while some types such as the Newlyweds Hope Town are supported up to 90percent at most.

The guarantee fee rate was set at an annual rate of 0.324%, as a single rate.

Review and operating standards have been significantly relaxed. HUG said it will operate by issuing guarantee certificates in installments, linked to LH's confirmation of as-built inspections.

HUG will set up a special counseling and review desk within its headquarters fund business division to provide prompt guarantee support. It plans to sign a memorandum of understanding (MOU) with LH this month for guarantee operations and will also hold meetings with private-sector construction companies.

HUG President Choi In-ho said the product will support the housing industry, which is facing a liquidity crunch.