The potential collateral efficiency of housing is the cornerstone on which to develop a housing finance system. In developing countries, this collateral question goes beyond the provision of mortgage services for housing ownership, as is the case in developed countries. In developing countries, a high level of consumption of housing services is less critical than the role of housing as a savings vehicle. Housing assets are reliable income generating assets when salaried incomes, social security systems and retirement systems are not well developed. The paper first presents financial conditions in Korea during the period 1960 - 1985. Over that time, the economy spanned almost the entire range of developing country incomes from US$100 to US$2,200 per capita and was a microcosm of most financial development issues. This description is followed by the analysis of two key aspects of Chonse: 1) the analysis shows how the collateral value of housing fluctuates according to interest rate levels and financial market conditions, and 2) it evaluates the impact of this asset-constrained system on housing tenure choices and access to housing. The paper closes with evidence on the impacts of this housing finance system on capital formation.