PTSB plans mortgage-to-rent scheme with Merrion-led group

Bank expects up to 2,000 borrowers to take up offer to forfeit home to become tenants

Permanent TSB: has identified 579 additional cases of tracker mortgage overcharging as part of Central Bank-ordered review. Photograph: Alan Betson

Permanent TSB: has identified 579 additional cases of tracker mortgage overcharging as part of Central Bank-ordered review. Photograph: Alan Betson

 

Permanent TSB expects up to 2,000 struggling home borrowers to avail of a mortgage-to-rent scheme it is working on with a “preferred partner”, the bank’s director of operations, Shane O’Sullivan, said on Thursday.

It is set to be launched in the coming months.

Sources said the partner is a consortium called Home for Life, led by investment firm Merrion Capital and debt-restructuring company Beacon Capital and backed by more than €500 million of funding committed by international investors, understood to include pension funds.

The Home for Life fund, supported in its development by the Phoenix Project debt charity, would acquire distressed loans from PTSB that qualify for social housing under the Government’s recently improved mortgage-to-rent scheme. PTSB and Home for Life declined to comment.

Earlier this week AIB became the first Irish bank to launch an enhanced mortgage-to-rent scheme following a move by the Government this year to modify a previous plan that has had limited take-up in recent years. AIB is working with a debtors’ advocate, David Hall’s Irish Mortgage Holders Organisation, and the new iCare Housing company.

Under the scheme AIB will give iCare €100 million to buy properties, which will be rented back to families who forfeit ownership of the homes, and who qualify for social housing, in return for a long-term lease.

Buy-to-let strugglers

Speaking at an Oireachtas finance committee meeting on Thursday, Mr O’Sullivan also said that PTSB has identified up to 1,000 struggling buy-to-let borrowers to avail of a recently announced plan to offer to forgive any arrears or shortfalls on a sale of a property if they agree to a voluntary surrender.

So far the bank has written to 600 of these customers and expects “a lot” of these to take up the offer, the executive said. Under the plan the customer’s residual mortgage debt, following the property sale, is fully written off.

PTSB also revealed that its level of overcharged mortgage borrowers on rates that track the European Central Bank has risen.

PTSB was the first Irish bank to identify overcharging in its loan books in recent years, when it disclosed in July 2015 that 1,372 customers had been affected as the lender wrongly denied them their contractual rights to an ECB tracker rate, typically after a period on a fixed rate.

Ger Mitchell, a senior PTSB executive who is in charge of the review, said 98 per cent of these customers have been redressed and compensated, although 247 individuals subsequently lodged appeals against the bank’s remediation plan. Some 67 of customers’ cases were upheld by two independent appeals panels.

Mr Mitchell said the bank has identified 579 additional cases of tracker mortgage overcharging, as part of a review the Central Bank ordered the State’s lenders to carry out in late 2015. That’s up on the 182 such cases that it had found by the end of March, according to previous correspondence with the Oireachtas committee, which The Irish Times reported in June.

Mr Mitchell said PTSB aims to have the additional customers “remediated fully before the end of the year”.