New mortgage arrears scheme ‘could keep people in homes’

New mortgage arrears scheme ‘could keep people in homes’

This article was originally published by The Irish Times.

A scheme that would involve purchasing the houses of people who are deep in arrears with their mortgages while allowing the owners to stay in their homes could be launched within the next six weeks by a group led by high-profile debtor advocate David Hall.

I Care Housing, a not-for-profit approved housing body, is believed to be in advanced discussions with a number of banks about acquiring loans that are in arrears, with a view to allowing the borrowers to remain in their homes for the long term.

It is also in talks with pension funds and banks, both here and abroad, about securing funding for the project, which would allow the banks to reduce their stock of non-performing loans without having to seek repossessions.

AIBBank of Ireland and Permanent TSB are under pressure from the European Central Bank to reduce their non-performing loans, particularly their long-term mortgage arrears.

It is understood that Mr Hall’s group is being advised by accounting firm Grant Thornton and that it has had extensive engagement with the Minister for Housing Simon Coveney and his officials.

The project has been under development for almost a year and has two elements. One involves a mortgage-to-rent scheme, whereby I Care Housing would purchase the properties of borrowers who are eligible for social housing.

It would then rent the properties back to the home owner, who would be entitled to have some or all of their rent paid for by their local authority. Tenants would be able to buy back the houses in the future under certain conditions.

Provide loans

This element could require funding of €100 million initially, with money sought from the Housing Finance Agency, a state body that provides loan finance to local authorities and voluntary housing bodies.

Separately, Mr Hall is looking at purchasing a swathe of non-performing mortgages from banks and vulture funds at a haircut to the original loan. It would then offer to restructure the mortgage for the borrower. This element could require funding of €1 billion or more.Learn more

It is understood that the housing body would only deal with borrowers who consent to having their loans sold on, and it would seek to avoid cases that that are likely to involve repossessions.

When contacted, Mr Hall said a project was being worked on that “would keep people in their family homes” but declined to comment on the details.

A report in the Sunday Times suggested that AIB had identified 750 mortgage accounts that could be eligible for a scheme that would allow them to remain in their home as tenants if they agree to surrender ownership of the property.

Meanwhile, the Sunday Business Post said AIB was poised to sell up to 2,000 properties and as many as 3,000 distressed mortgages to what it described as anti-repossession advocates. AIB declined to comment on these reports.

Mr Hall is best known as a co-founder and director of the Irish Mortgage Holders Organisation, which has negotiated with lenders on behalf of borrowers in arrears with their home loans. It currently has about 2,400 cases on its books.

Others involved in I Care Housing are Stephen Curtis, also of the IMHO, economist Constantin GurgievLucy Cronin, a partner with specialist consultancy Instinctif Partners, and Arthur Mullan, a solicitor and IMHO executive.