Investigation Underway into Misuse of Japanese Government-Backed Loan

The Japanese Ministry of Land, Infrastructure, Transport, and Tourism (MLIT) has launched an investigation into potential fdulent activities surrounding the misuse of Flat 35 loans. Flat 35 loans, securitized by the Japan Housing Finance Agency (JHF), are government-backed loans designed to help individuals afford family homes. However, it has come to light that some borrowers have been exploiting these loans to acquire investment properties. The scope of the scandal is currently being investigated, with banks suspected of knowingly issuing fdulent loans.

The MLIT has urged the JHF and its partner banks to conduct thorough investigations and implement preventive measures. Minister Keiichi Ishii expressed the need for borrowers who misused Flat 35 loans to repay their debts in a lump sum during a press conference on May 27, 2019.

Aruhi Corporation Implicated in Fdulent Loans

The Nikkei newspaper reported that Aruhi Corporation, a leading provider of Flat 35 loans, is implicated in approximately 100 fdulent transactions. However, in a press conference on May 7, the company denied engaging in any illegal activities related to Flat 35 loans and pledged to strengthen its screening process to prevent future fd.

Aruhi argues that the number of fdulent loans represents only 0.1% of their total turnover, which consists of tens of thousands of transactions. The investigation is ongoing, and due to the large number of Flat 35 loans issued (680,000), it is challenging to assess every property involved.

Renting Homes and Loans at the Center of Fd

The real estate industry in Tokyo has been grappling with issues surrounding fdulent activities since the early 2010s. The Suruga Bank scandal, which involved manipulating loan issuances by overriding other properties, drew attention to these problems. Similar cases at other financial institutions have surfaced, leading to increased scrutiny in 2018.

Understanding Flat 35 Loans

Flat 35 loans are government-backed mortgages that offer low, fixed interest rates for terms of up to 35 years. As of April 2019, the interest rate for a Flat 35 loan ranged from 1.290% to 1.960%, significantly lower than the average commercial loan rate of 80% in Japan.

Eligibility for Foreigners

Foreigners are also eligible for Flat 35 loans, as they aim to assist a wide range of individuals in achieving homeownership. Although the loan is backed by the government-affiliated JHF, it is still issued by financial institutions, and applicants, including foreigners, must go through a lengthy process and provide the necessary paperwork, similar to other loan applications.