[Edaily Reporter Hong Soo-hyeon ] As attention focuses on the penthouse at “Hannam The Hill”—a luxury residential complex in Seoul’s Yongsan-gu district—purchased by top musical theater actress Ok Joo-hyun, which is now undergoing court auction proceedings, practicing attorneys have examined the root causes of this auction situation.

In a recently released video, the YouTube legal channel “Roel Law Firm” (Managing Partner Lee Won-hwa) identified the root causes of this auction situation as “an extremely aggressive leveraged investment carried out with minimal equity and an unsustainable burden of high-interest payments.”

Previously, on the 14th, the Seoul Western District Court issued a decision to commence a voluntary auction for the Hannam The Hill property owned by Ok Ju-hyun. The creditor who filed for the auction is Korea Financial Asset Management & Lending, and the claimed amount is approximately 2.17 billion won. Four mortgage liens are registered on the property’s title deed, with a combined maximum debt amount of 23.7 billion won.

Ok Ju-hyun purchased the Hannam The Hill property (with an exclusive area of 330 square meters) for approximately 19 billion won last year and completed the transfer of ownership registration in April of this year. Given the strict application of lending regulations by primary financial institutions on high-priced homes, it is understood that the funds for the purchase were secured through a series of high-interest loans from secondary financial institutions (capital companies) and lending firms.

Ok Ju-hyun secured an additional secured loan by leveraging the increase in market value of a plot of land and building in Sinsa-dong, Gangnam-gu, Seoul—which she had previously constructed under a sole-proprietorship corporation—and bundled this with Hannam The Hill as joint collateral to raise a large sum of funds. The total loan amount for both properties exceeded 30 billion won, and with the statutory maximum interest rate and other high interest rates applied, the annual interest burden alone is estimated to have amounted to at least 2 billion won (around 200 million won per month).

Ok Ju-hyun’s side stated, “To pursue new businesses in various fields such as performances, performance planning, and education, we have been formulating concrete business plans and making practical preparations centered on our existing corporate building in Sinsa-dong,” adding, “In the process, we secured a large-scale investment from a business investment firm.”

They continued, “As part of the business development and investment attraction process, we purchased a residence in Hannam-dong in April of this year. Following the recent completion of a merger and acquisition (M&A) between Ok Ju-hyun’s corporation and the investment firm, we are currently proceeding with the process of settling existing matters, including the debt related to that residence.”

Ok Ju-hyun’s representatives stated, “The matter regarding the auction of the Hannam-dong residence is also intertwined with this business development and debt settlement process,” adding, “We are currently working with the investment firm on specific debt repayment and settlement procedures, and according to the business plan, the investment firm is scheduled to repay the full amount of the related loan.” They added, “We will proceed with the necessary steps to ensure that the relevant matters are resolved amicably.”

According to the Financial Supervisory Service, the non-performing loan ratio for domestic banks stood at 0.63% as of the end of the second quarter. It has surged to levels last seen in late 2020, when the entire nation was struggling with the COVID-19 pandemic, and non-performing loans have swelled to their highest level in eight years.

With the volume of non-performing loans in the banking sector increasing by more than 1 trillion won each quarter, observers predict that the number of properties going to auction will rise even further. This is because banks, after urging borrowers in default to repay their loans for a certain period, put collateral such as homes and factories up for auction if they determine that repayment is unlikely. From January through September of this year, the number of auction cases reached 93,381, a 3.7% increase from the same period last year (90,012).

In a video posted on her YouTube channel on the 12th, tax accountant Lee Seung-hee explained, “The amount of debt that cannot be repaid is growing much faster than the rate at which loans are increasing,” adding, “The current flood of auction properties is a lagging indicator showing that the financial distress that began in the past has reached its final stage.”