Judge says mortgage-to-rent scheme could give 'false hope'

Tue, Nov 20, 2012, 00:00

The mortgage-to-rent scheme, designed to help people in arrears to stay in their own homes, could be “giving false hope” to those in difficulties, a High Court judge has said.

If reports that only one couple had availed of it were true, Ms Justice Elizabeth Dunne said the scheme perhaps should not be raised in court as an option for borrowers in arrears. The Government mortgage-to-rent scheme was announced by Minister of State for Housing Jan O’Sullivan in June. Under the scheme, low-income families in arrears remain in their own homes but no longer own them. They pay rent to a housing agency which buys the distressed properties from lenders at the market rate.

Reports at the weekend said only one transaction under the scheme had been fully completed, although the Department of the Environment has since said more cases are expected to be concluded shortly in what is a complex process.

In a case involving Stepstone Mortgage Funding Ltd, Ms Justice Dunne said she had heard or read that only one party availed of the scheme. It seemed unfortunate if the scheme was “not working out” that it would be “giving false hope” to borrowers in difficulty, she said.

Counsel for the borrowers said his clients were no longer seeking to adjourn the case pending their mortgage-to-rent scheme application because they had no success with it. He had other clients who had also applied to the scheme but who were not successful, he said.

Ms Justice Dunne adjourned the case to December on other defence grounds.

Five orders for possession for family homes were granted to subprime lender Start Mortgages Ltd at the High Court yesterday, including a case in which a separated father was awaiting personal injuries compensation to pay off his mortgage arrears.

Counsel for the borrower, a father of two from Westmeath, told the court her client was a self-employed taxi driver who was the sole carer for his children. His wife had “alcohol difficulties”, they had split up and he was “under great stress”.

The couple had remortgaged their home in 2005, borrowing €150,000. They first defaulted on repayments in 2008 after the husband had a car accident. They now owed arrears of almost €33,000. Documents filed with the court showed the husband was receiving €247 a week one-parent family allowance and had outgoings of €243.

Counsel asked that the case be adjourned to give more time for a personal injuries case, initiated in October 2011, to be completed. The proceeds would cover the arrears, she said.

Ms Justice Dunne agreed to make the order for possession but put a stay of execution of nine months on it, in the hope the personal injuries case would be settled before then.