Banks must offer mortgage scheme, say borrowers groups

Banks must be compelled to offer mortgage-to-rent to households in serious mortgage arrears, groups advocating for distressed borrowers have said.

The current bank veto on the scheme – they do not have to offer this option – is not due to change under proposed Government reforms.

Figures released to The Irish Times show just two sub-prime lenders completed three-quarters of all the mortgage-to-rent cases here, while the four main Irish banks have completed just 16 per cent between them. The figures are from the Housing Agency, the government body which manages the scheme; groups have called for "radical reform" of the scheme.

Meaningful measures

With the rate of home repossessions increasing by more than 500 per cent since last year, and up to 8,000 civil bills for repossession lodged across the country’s 26 district courts, political pressure is mounting for meaningful measures to address the crisis.

Among them is a plan to expand the mortgage-to-rent scheme by relaxing some of the criteria and increasing the valuation limit on Dublin homes, from €220,000 to €350,000.

Since it was established three years ago, lenders have submitted 2,865 cases to the Housing Agency. Just 96 have been completed. Of these, subprime asset manager Pepper has completed 61, while Start Mortgages has completed 11.

Bank Of Ireland and PTSB have each completed six, KBC Ireland five, AIB/EBS four, while Stepstone has completed three. Ulster Bank, Danske Bank and IBRC have not completed any.

Remove veto

David Hall

of the

Irish Mortgage Holders Organisation

says the banks’ effective veto must be removed. “If the Government is serious, the banks must be compelled to offer this solution to the few borrowers who are eligible for it.”

To be eligible, the borrower’s mortgage must be unsustainable, they must be deemed eligible for social housing and, in addition, the home must be in negative equity and must be in an area of “housing need”.

It is a “cumbersome process”, says Mr Hall, involving up to seven different bodies.

Claire Feeney, manager of the scheme at the Housing Agency, is hopeful the number of cases, and the speed at which they are processed, will increase. She says as well as the 96 processed so far, a further 578 cases are being processed, with 31 of these at "sale-agreed" stage and 84 "under offer" with lenders.