PPP blasts Lee over W1.77b mortgage on sold apartment

President Lee Jae Myung and first lady Kim Hye-kyung applaud a speaker at a VIP dinner for the 48th UNESCO World Heritage Committee session in Busan on Sunday. [Yonhap]

The People Power Party unleashed sharp criticism Monday over President Lee Jae Myung's sale of his apartment in Bundang-gu, Seongnam, Gyeonggi Province, calling the transaction a "trick."

PPP spokesperson Ham In-kyung said in a statement that Lee and his wife sold the Bundang apartment for 2.9 billion won ($1.95 million) while registering a maximum mortgage of 1.77 billion won against the buyers as debtors. Ham said the transaction's backdrop appeared to involve the apartment's impending designation as a reconstruction project operator — expected to be announced by the end of this month — and the risk that buyers who failed to complete the ownership transfer before that announcement could lose their right to join the reconstruction association.

Ham went on to say that observers were raising the possibility that the sellers had used a "seller financing" arrangement — accepting deferred payment of part of the purchase price — to rush through the ownership transfer at a time when conventional mortgage loans were unavailable. "The president has made it nearly impossible for ordinary people to buy or upgrade their homes by piling up loan regulations, yet he closed his own deal this way," Ham said.

Rep. Na Kyung-won also weighed in on Facebook, saying the president had "personally demonstrated an unprecedented dismantling of loan regulations and a real estate transaction trick." She called it "a jaw-dropping guideline telling people to borrow private money directly from the seller if they can't get a bank loan."

Rep. Song Eon-seog wrote on Facebook that Lee "must clearly explain why his own transaction was handled differently from the regulations imposed on the public" and urged the president to "apologize to the people for the policy failure behind today's distorted real estate market."

Rep. Ju Jin-woo urged the presidential office to explain "why mortgage loans were blocked for ordinary citizens to prevent gap purchases, while Lee and his wife lent the buyers of his home about 1.5 billion won in place of a bank." He asked, "Is the president's home the only one with a special story, and are only his buyers the ones with special circumstances?"

Yangji Village Kumho Complex 1 in Bundang-gu, Seongnam. [Naver Road View]

According to registry documents from the Supreme Court, the Yangji Village apartment previously owned by Lee and his wife sold for 2.9 billion won under a contract signed July 14, with the ownership transfer completed July 16. The buyers, identified by their surnames Kim and Jo, purchased the unit as joint owners with equal shares. With the ownership transfer registered ahead of the expected announcement of the reconstruction project operator designation later this month, the buyers are expected to secure membership in the reconstruction association.

The controversy began when it emerged that Lee and first lady Kim had registered a maximum mortgage of 1.77 billion won against buyers Kim and Jo — equivalent to about 61 percent of the 2.9 billion won sale price. Analysts said the arrangement appeared designed to give the buyers, who had not prepared the full cash amount, extra time to complete payment, given that a mortgage registered after the project operator designation announcement would likely disqualify them from receiving pre-sale rights.

The presidential office addressed the matter Monday, saying the mortgage registration "was done at the buyers' request." It said the transaction was completed at 2.9 billion won, below the market price, and described the sale as "a measure demonstrating the will to realize the real estate normalization policy," noting that Lee had no legal obligation to sell as a single-home owner.

soho0902@heraldcorp.com