Families who are in deep arrears have been given fresh hope that they will be able to stay in their homes – as renters.
Mortgage campaigner David Hall has done a deal with AIB to buy out hundreds of homes where the mortgage holders are in arrears.
They will then be rented back to the families that previously had mortgages on them.
It is understood that funding of up to €100m for Mr Hall’s iCare Housing organisation is set to be provided by the bank for an initial phase of the scheme.
Debts of those taking up the scheme will be written off, once they surrender their homes to iCare. People who get on to the scheme will have to qualify for social housing.
But they will get an opportunity to buy back the homes in the future if their personal circumstances improve, the Irish Independent has learned.
The chance to buy back the homes should act as an incentive to keep people paying the rent. It is an enhanced mortgage-to-rent plan, and the first time such a large-scale scheme has been tried in this country.
It has Government backing, and Housing Minister Eoghan Murphy is set to announce the deal today.
Mr Hall said: “This is the biggest mortgage arrears solution since the crash.
“It will apply to the most vulnerable and stop them losing their homes.”
He said the scheme would apply to a few hundred homes initially, but it had the potential to apply up to between 7,000 and 10,000 homeowners who were in mortgage distress across all banks.
There are more than 30,000 residential mortgage account holders who are more than two years behind on their payments. These people are at high risk of losing their homes.
Mr Hall said: “The big issue now is housing, and not debt. People need somewhere to live, so it is about ensuring they do not end up with their homes repossessed.”
He added that the scheme could be life changing for those who benefit, most of whom will have legal proceedings hanging over them. Part of the deal will seek legal cases adjourned.
Distressed
“This will be the golden ticket for these people. It is a game-changer,” he said.
Mr Hall’s iCare is a not-for-profit housing body. Its directors include Pat Doyle of the Peter McVerry homeless charity, and Louisa Santoro of the Mendicity Institution, one of Dublin’s oldest charities.
ICare will use the Government’s mortgage-to-rent scheme to buy the homes of distressed borrowers.
It will then allow them to remain in their homes.
The properties will be leased to local authorities, and the families will pay rent to the council. Children will be able to stay in the same school.
The current scheme will be restricted to those who qualify for social housing. This means a family in Dublin will be on an income of less than €42,000.
In Cork county the income limit is €36,000.
But the iCare scheme will be broadened out to private tenants in time.
Eligible properties for the scheme must be valued between €280,000 and €365,000, depending on the location, with the higher values for Dublin.
Other groups, such as Arizun and the Merrion Capital and Phoenix-backed Home for Life scheme, are also hoping to launch large-scale mortgage-to-rent schemes. Arizun is also looking at private rental schemes.
Earlier this year the Government announced changes to the mortgage-to-rent scheme to allow thousands of additional struggling mortgage holders to become eligible to apply.
The amendments to the scheme, originally developed in 2011, were announced by then housing minister Simon Coveney.
Several changes to the eligibility criteria of the scheme are being made – which will mean more households in rural areas, in particular, will be eligible.
A more formal communication channel between the lenders and borrowers was being proposed.
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