Suruga searches for solution to share house scandal

Some sharehouse investment scam victims may soon be let off the hook if the bank at the center of the scandal gets its way. Suruga Bank is allegedly considering a proposal whereby borrowers could have their loans cleared if they return their mortgaged properties to the bank.

The embattled bank has lent up to 200 billion Yen (approx. 1.8 billion USD) to as many as 1,200 investors in sharehouses. So far, approximately 300 of the investors are requesting that the bank wipe out their loans in exchange for handing back the properties. Insiders suggest that Suruga may be looking for institutional investors who would be prepared to buy up the sharehouses from the bank.

 In many of the cases, investors had purchased properties at over-inflated prices with falsified rental returns. Income tax returns and bank statements had been photoshopped by real estate agents in order for buyers to receive excessive loans. The long-running scam came undone in early 2018 when one of the real estate companies promoting the dodgy investments abruptly filed for bankruptcy. 

A report issued by the Bank of Japan on February 8 showed that new lending on real estate by 136 of the surveyed banks in Japan in 2018 was 11.1125 trillion Yen (approx. 100 billion USD), down 5.7% from 2017 and the second year in a row to record a decrease. This is the largest year-on-year decrease since 2009. 

The biggest decline was in lending to individuals for the purpose of buying or building rental housing. In this sector, new lending in 2018 was 2.8348 trillion Yen, down 16.4% from 2017 and the lowest level since 2012. 

Sources:
The Nikkei Shimbun, November 20, 2019.
The Asahi Shimbun, November 21, 2019.

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