# New Rent to Buy Scheme between IMHO and AIB



## Brendan Burgess (27 Sep 2017)

http://www.independent.ie/business/personal-finance/property-mortgages/plan-for-families-in-mortgage-arrears-to-stay-put-as-renters-36172747.html


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.


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## Brendan Burgess (27 Sep 2017)

Here is a note on the proposal which I sent to the media this morning: 

Below is my take on the scheme which the Minister is due to announce today according to this article in the Irish Independent. 


http://www.independent.ie/business/...-arrears-to-stay-put-as-renters-36172747.html


This is a kick in the teeth  for  responsible mortgage holder and the taxpayer generally


What about responsible borrowers who have made huge sacrifices to keep up with their mortgages? They have cancelled their health insurance and their holidays. They have taken up a second job or worked overtime. They may have got rid of their car. They may have borrowed money from their parents. And they may well still be in negative equity in a house which they would have expected to trade up from some years ago. What is their reward? – a mortgage rate which is twice the rate being charged elsewhere in the eurozone.


What about people who haven’t paid their mortgages?  In any other country, their home would have been repossessed and sold on to someone able to pay the mortgage. They would join the social housing list and get allocated accommodation based on their needs and their place in the queue.

But in Ireland, the bank is prevented from repossessing the house.  Now instead of joining the social housing list, they skip the 100,000 queue and not only get a house, but get the house of their choice in the location of their choice.

We the taxpayer will pay their rent for them. (These houses will be leased back to the local authority who will pay iCare. If the tenants don’t bother paying their rent, as 30% of council tenants don’t, then tough on the council/taxpayer – iCare will still get their money.)

And to add insult to injury, in 10 years or so, they will be able to buy back the property at a 40% discount to the market value.

This is just wrong. 

It rewards people who have not paid their mortgage and the responsible people who have paid, end up paying double the interest rate.

It penalises people on the social housing list already, because now 500 people will be jumping the queue and using up the limited resources.

*The numbers in the newspaper look wrong.*

“Eligible properties for the scheme must be valued between €280,000 and €365,000, depending on the location, with the higher values for Dublin.”

I presume that this means up to a limit of €280k outside Dublin and a limit of €365k in Dublin.

*But are some of these not genuine? *

Some probably are.  But there is a very simple solution.  They should retain ownership of their house and the taxpayer should pay the interest for them.

That would be a lot cheaper than paying rent for them.  It is much more expensive to pay rent than to pay interest – even though interest is twice the rate being charged in the rest of Europe. 



*Why is AIB doing this? *

In any other country, they would simply repossess the houses and move on. In Ireland, they just can't repossess the houses.

At the other end, they are being told by politicians and the regulatory authorities to deal with mortgages in arrears.

So they are in an impossible position and this solves it for them.


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## Brendan Burgess (27 Sep 2017)

AIB's statement issued this morning 

*Subject:* *New initiative from AIB, IMHO and iCare aimed at keeping people in their homes*



*27th September 2017*

·  *Enhanced Mortgage to Rent solution to benefit AIB, EBS and Haven customers in long-term arrears who qualify for social housing*

·  *Eligible customers who complete the Mortgage to Rent process will continue to live in their home as long-term tenants of iCare Housing*

·  *Customers can buy back their home at the discounted price paid by iCare Housing if their circumstances improve*

AIB Group, the Irish Mortgage Holders Organisation and iCare Housing today announced a joint initiative aimed at keeping customers in difficulty with their mortgage, and who qualify for social housing, in their own homes.  iCare Housing, a not-for-profit Approved Housing Body was set up for the purpose of providing and managing social rented housing for customers who are eligible for Mortgage To Rent.


Under the enhanced Mortgage To Rent solution:

·  AIB, EBS and Haven customers can contact their lender or avail of free financial advisory services from the IMHO.

·  If a customer’s mortgage debt is deemed unsustainable following an affordability assessment completed by the Bank, the Mortgage to Rent solution may be suitable.

·  If a customer is eligible for, and completes, the Mortgage to Rent process:

Ø  Ownership of the customer’s home transfers to iCare Housing

Ø  The customer becomes a long-term tenant of iCare Housing

Ø  Any remaining residual mortgage debt, following property sale, is fully written off

Ø  The customer has the option to buy back their home, at any time, at the price that iCare Housing paid for the property, including any discounts negotiated between iCare Housing and the Bank.


Jim O’Keeffe, AIB’s Head of Financial Solutions Group said “This initiative is primarily about keeping our mortgage customers who are in difficulty in their homes wherever possible.  We have made good progress in reducing our non-performing loans from c.€29 billion three years ago to c.€7.8 billion at half year 2017, including c40,000 mortgage customers with solutions in place.  We remain very aware that there are still customers who have very limited ability to meet their mortgage payments, and this enhanced Mortgage to Rent initiative is being provided to extend our range of solutions to support customers in this position.   As always, I would encourage any customer who is in difficulty with their mortgage to engage with us to find a suitable way forward.”


David Hall, CEO of the IMHO and iCare said “Today is a hugely significant day for those who have been struggling with unsustainable mortgage debt for the last number of years. For AIB, EBS & Haven customers an option now exists, for those who qualify for mortgage to rent , to remain in their homes, have their residual mortgage debt written off and have the option to buy their home back in the future for a price that is discounted from today's market value.  Having been involved in advocating and helping people in mortgage arrears for the last seven years, this is the most significant solution I have been involved in.  For people who are in trouble with their mortgage I would encourage them to contact us - solutions exist that allow families get their lives back and allow them stay in their home". 


As an Approved Housing Body, iCare will be funded via the Housing Agency, rent roll from the local authority, and commercial lending.  iCare Housing will be supported with commercial funding from AIB Corporate Banking.  AIB Corporate Banking has significant experience in financing of the Social Housing Sector.  It is working with a number of other approved housing bodies on funding for acquiring social housing.


AIB, EBS and Haven, and the IMHO, urge customers to engage with them to find out more about iCare Housing.  Customers who want to discuss their mortgage arrears can contact:

IMHO on 1800 988 977

AIB on 1800 200 811


More information at www.icarehousing.ie and [broken link removed]-housing, [broken link removed]-housing,


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## Brendan Burgess (27 Sep 2017)

Brendan Burgess said:


> have their residual mortgage debt written off and have the option to buy their home back in the future for a price that is discounted from today's market value.



This really is crazy stuff. 

A discount from today's market value!

Brendan


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## Brendan Burgess (27 Sep 2017)

Brendan Burgess said:


> As an Approved Housing Body, iCare will be funded via the Housing Agency,



Great, so the taxpayer will fund these at less than 1% while the average non-tracker borrower is paying 3.4% on their mortgage. 

Brendan


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## spanners (27 Sep 2017)

Hi Brendan, heard you discussing this on Newstalk. Well said, about time somebody spoke up and pointed out how utterly bananas this situation is. It is maddening that politicians in this country either cannot understand or cannot accept that the very reason the mortgage arrears problem is so bad is because of offering deals like this instead of repossession.

So they announce this and the consequences will be yet another swathe of mortgage holders will understandably conclude that paying the mortgage is a mugs game. And the situation gets worse.

Meanwhile the rest of us are paying for it!


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## Bronte (27 Sep 2017)

I'm delighted with this. It should have been done years ago.

I don't see the benefit of people struggling long term being now evicted and going on the housing list which is already out of control.

I'm very very glad for the many posters over the years on here who did everything they could, many suicidal. Many who actually committed suicide, left Ireland, broken families, broken people.

And let me be clear, I make a distinction between the won't pay versus can't pay.


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## Bronte (27 Sep 2017)

Being discussed on Pat Kenny now.


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## LS400 (27 Sep 2017)

Making the distinction and proving it are two entirely different things, the wont pay would be fools not to jump on the band wagon.


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## Codogly (27 Sep 2017)

Number One Rule of an efficient economy :  You should never have a situation where those who work the hardest and who conduct their financial affair in a responsible manner end up worse off financially than those who don't work as hard and are less responsible with the management of their financial affairs and are rewarded by a bail out from the taxpayer.

This is a very dangerous development ... people will do the math's and realize that working hard and being responsible is in fact not the best course of action... so why do it.

Mark my words , I've said it hear before ... next up is the responsible people who have provided adequately for their retirement ... as the government struggles to deal with the pension issue they will turn their attention to higher taxes on pensions possible means test away the state pension from people who also paid into a contributory pension also.


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## Brendan Burgess (27 Sep 2017)

Bronte said:


> Being discussed on Pat Kenny now.



Thanks Bronte

Caught the end of it.  Fair play to Pat Kenny. He pointed out all the downsides by way of all the texts and emails from people who have struggled to pay their mortgage and end up paying the highest mortgage rates in the eurozone.

He also pointed out that these guys all fly up to the top of the social housing lists and get to stay int the house they chose.


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## Delboy (27 Sep 2017)

On Sean O'Rourke now with David Hall


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## Brendan Burgess (27 Sep 2017)

Delboy said:


> On Sean O'Rourke now with David Hall



Hi Delboy

Did he provide any additional information? 

Brendan


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## Delboy (27 Sep 2017)

Sorry, had to take a phone call so didn't get to hear anything other than the start


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## Joe90 (27 Sep 2017)

A useful option for the can't pays. But it could be abused by the won't pays. 

I'm not against the principle of this, but taxpayers should not be underwriting this and it needs to be made clear that this is only available to historical cases. I'd be sickened if the scheme was going to take on the famous bank buster in my local area who I know refuses to pay his mortgage and holidays in Florida every year....


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## Brendan Burgess (27 Sep 2017)

*Minister Eoghan Murphy welcomes iCare Housing Mortgage to Rent Scheme Initiative *


Minister for Housing, Planning and Local Government, Eoghan Murphy, T.D., today (27 September,  2017) welcomed the announcement by iCare Housing that, working together with a number of specific lenders, they intend to make the Government’s recently reformed  Mortgage to Rent scheme work for a large number of households in mortgage arrears around country. 


Speaking today Minister Murphy said “I am pleased to support, iCare’s initiative and commend their commitment to using the Mortgage to Rent scheme in order to benefit a large number of households in long-term mortgage arrears.  Changes made following the review of the scheme published in February mean that the scheme is now more accessible to more households who may be at risk of losing their home because of unsustainable mortgage arrears.  However, delivering the scheme at scale remains a challenge.  The announcement by iCare Housing that, for the first time, there is an official arrangement between a lender and Approved Housing Body that will allow a significant number of borrowers to remain in their home as social housing tenants, without the worry of having to deal with legacy debt, is significant. I would encourage other AHBs and lenders to consider how they can work together to utilise the scheme in order to benefit a greater number of eligible borrowers.”


The Minister acknowledged that the Mortgage to Rent Scheme is not a first choice for those in mortgage arrears difficulties. “It is no small matter to lose ownership of your house. However, where this seems to be the last resort, to have the additional option of remaining in your own home and community is invaluable to many families.  The key role of the Abhaile Service, the Insolvency Service and the Money Advice and Budgetary Service in communicating the availability of the MTR scheme and the eligibility criteria to borrowers in arrears is critical to the successful delivery of the scheme and I would encourage borrowers in long-term mortgage arrears to engage with these services.” 


Underlining the Government’s commitment to the successful operation of the scheme, the Minister remarked “Ultimately we want the scheme to be capable of being a real long-term solution for the families who it is designed for.  My Department and the Housing Agency will work with iCare Housing and all the other participants in the scheme to meet the needs of more borrowers who require long-term support with their housing needs.”


*ENDS*


*Notes to Editors:*

The Approved Housing Body Mortgage to Rent Scheme for borrowers of private commercial lending institutions was developed as part of the implementation of the recommendations of the Keane Report on Mortgage Arrears in 2011 and is one part of a concerted effort across the whole of Government to tackle the mortgage arrears crisis.  The scheme is part of the overall suite of social housing options and an important part of the mortgage arrears resolution process.


Mortgage to Rent (MTR) targets the most acute mortgage arrears cases where a situation is unsustainable and where there is little or no prospect of a significant change in the householder’s circumstances in the foreseeable future.  Under the scheme, a householder with an unsustainable mortgage goes from being a homeowner to becoming a social housing tenant of an Approved Housing Body (AHB).  They voluntarily surrender their property to their lender who, in turn, sells the property to an AHB.  The AHB becomes the landlord and the household gets to remain in the family home.

The household must be eligible for social housing and the property must meet the appropriate standards for social housing.  Householders are able to buy out the property at a later stage.  However, in reality, their circumstances would have to have changed very radically in that period for them to be in a position to access mortgage finance.


*Review of the Mortgage to Rent Scheme (February 2017):*

A review of the MTR scheme published in February identified a number of key changes to the scheme:


Lenders are now required to formally communicate with borrowers as to why they are not suitable for the scheme.
Flexibility has been provided in relation to the size of properties which qualify for the scheme.  In practical terms, this means that an assessment of the property size suitable to a particular household will allow for a maximum of two additional bedrooms in the property above the actual needs of the household, with the property still being considered eligible.
The property price thresholds for eligibility under the scheme have been increased in line with the acquisition thresholds for social housing generally. The threshold for a house in Cork, Dublin, Galway, Kildare, Louth, Meath and Wicklow has been increased to €365,000 while the threshold for an apartment / townhouse in these areas has been increased to €310,000.  For the rest of the country, the threshold for a house is now €280,000 and for an apartment / townhouse €210,000. The most significant increases are in the more rural locations which is consistent with market findings.  These thresholds will be subject to regular reviews taking account of the market at the time and will continue remain in line with the acquisition thresholds for social housing generally.

A significant change if that the application by the borrower for Social Housing Support is now made by the borrower to the local authority prior to submitting the MTR application to the Housing Agency.  This change means that the borrower will know from an early stage of SHS eligibility or not, and if not will need to focus attention on other options to deal with their debt.
A key objective of the actions – and a measure of success – will be reduction in the average length of time for the completion of a transaction will reduce from between 12-18 months currently to less than 9 months.

Increasing the visibility and familiarity of the scheme among borrowers is a critical objective. The new Abhaile Service and MABS are important in that context. There are specific actions focused on engaging those agencies and their nationwide support services.

Further information on the operation of the scheme to date is available from the Housing Agency’s website:


https://www.housingagency.ie/our-services/housing-supply-services/mortgage-to-rent.aspx



*iCare Housing *

iCare Housing became a registered Approved Housing Body in October 2016 in accordance with the relevant statutory requirements and has signed up to the Voluntary Regulation Code.  The organisation proposes to work with the Housing Agency, who administers the Mortgage to Rent on the Department of Housing’s behalf, utilising the existing MTR scheme to complete a significant number of MTR arrangements around the country.  Under iCare proposal, for the first time there is an official arrangement between a lender and AHB on multiple properties rather than negotiations on a per property basis.  It should be noted that the MTR scheme is voluntary and is based on the borrower voluntarily surrendering their home to their lender who then sell it to an AHB.


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## TLO (27 Sep 2017)

Personal Insolvency Arrangements are a more holistic way of addressing unsustainable mortgages as other debt, for example, unsecured loans, Revenue debt, can be included.  

And MTR is inherently unfair as it has the effect of putting the "head in the sand" group to the top of the social housing list.


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## Sarenco (27 Sep 2017)

Brendan Burgess said:


> And to add insult to injury, in 10 years or so, they will be able to buy back the property at a *40% discount* to the market value.



Hi Brendan

Where does this figure come from?  Do we know that AIB is taking a 40% haircut?

It seems very odd that the customer has the option to buy back their home, at any time, at the price that iCare Housing paid for the property.  What happens if the market value of the property doubles over the next, say, 10 years?

I see Mr Hall has described the scheme as a "golden ticket for these people".  Hard to disagree but is it right to run public housing as a lottery?


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## Brendan Burgess (27 Sep 2017)

Hi Sarenco 

Local authority tenants get a discount up to 60% on the market value of their house. So I used the 40% figure in my earlier comment on it. 

David Hall said in the AIB statement :

"those who qualify for mortgage to rent... have the option to buy their home back in the future for a price that is discounted from today's market value."

That could be a lot bigger than 60%.  
It sounds as if iCare will buy the houses at around 80% of today's market value. 
The tenant will have an option to buy back at this price at any time in the future. 

"golden ticket" is an understatement. 

Brendan


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## odyssey06 (27 Sep 2017)

So much for moral hazard.

At this stage, there appears to be no moral, legal or economic rule that the government will honour in their mad scramble to be seen to be doing something about housing.

The only commandment they shall not breach is : "Thou shall not build more houses".


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## Sarenco (27 Sep 2017)

Brendan Burgess said:


> The tenant will have an option to buy back at this price at any time in the future.



So the mortgage debt is written off in full and the tenant is given an open-ended option to repurchase the property at what may well be a fraction of the market value of the property.

Presumably in the interim the rent will be well below market.

That's some deal alright.


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## The Horseman (27 Sep 2017)

To say this is crazy is an understatement. Suffice to say the banks have decided it is not economically viable or possible to repossess these properties to realize the outstanding balance. Yet on the flip side people complain about no competition in the banking sector and high mortgage rates.

We will be asking the same questions in about 10 yrs time and no doubt going through the same circumstances. Why aren't we willing to take the hit (painful as it may be) now and move on rather than putting a plaster on the cut knowing it will not heal.


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## Firefly (27 Sep 2017)

Codogly said:


> Mark my words , I've said it hear before ... next up is the responsible people who have provided adequately for their retirement ... as the government struggles to deal with the pension issue they will turn their attention to higher taxes on pensions possible means test away the state pension from people who also paid into a contributory pension also.



Without taking this off-topic I agree. Private pensions will become mandatory and the OAP will be the OAP minus the amount from somone's private pension. Those who never work will get the full OAP.


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## Brendan Burgess (27 Sep 2017)

I will be discussing the scheme with David Hall on Matt Cooper on Today FM at 16.30 and with Minister of State for Housing John Paul Phelan on TV3 just after 11 pm tonight. 

Brendan


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## Delboy (27 Sep 2017)

Ivan Yates spoke a bit about it there at 4pm.
He congratulated David Hall for all his fine work in this area and for putting together this scheme. He said AIB would have exhausted all options with the people who will come under this and that this is the best for all concerned.
He then went into pure fantasy land by saying the 500-2,000 people who'll come under this would have been evicted otherwise and their homes repossessed. That they'll forfeit the equity in their homes by signing up and have to take out mortgages in future if they wish to buy the houses (no mention of the large discounts they'll achieve).


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## Brendan Burgess (27 Sep 2017)

Got a bit more information on the scheme from David Hall on the Today with Matt Cooper

The renters will be getting a 28 year lease
The option price on the house will be in the lease - they can buy it back at any stage.
The price set today will be agreed with AIB - it will be a discount on today's market price, but the level of the discount is "commercially sensitive" - I suspect it's 10%.

One bit I didn't understand is that the taxpayer will be paying 40% of the cost of the house through a 30 year loan at 2% simple interest.

Something like the following:






The taxpayer will pay 92% of the market rent for the property and the tenant will pay the Social Housing rent. 

It will be for about 600 AIB customers initially, but eventually could be 7,500. 

Brendan


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## PGF2016 (27 Sep 2017)

Brendan Burgess said:


> I will be discussing the scheme with David Hall on Matt Cooper on Today FM at 16.30 and with Minister of State for Housing John Paul Phelan on TV3 just after 11 pm tonight.
> 
> Brendan


This is something that should go before a referendum long before lowering the voting age to 16. Let the public know how tax payers money is being used and see if they agree with it.


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## Sarenco (27 Sep 2017)

Brendan Burgess said:


> The option price on the house will be in the lease - they can buy it back at any stage.
> The price set today will be agreed with AIB - it will be a discount on today's market price, but the level of the discount is "commercially sensitive" - I suspect it's 10%.


This is one element of this deal that I just can't get my head around.

Why is the tenant/defaulting mortgagor being given an option to repurchase the property at any time at an option price that is calculated at a discount to today's market value?

That repurchase option will be valuable to the tenant/defaulting mortgagor from the outset but in time it could become incredibly valuable.  Who knows what the market value of the property will be in 10 or 20 years' time?

It seems so excessively generous that I pulled up the Department of Housing Review of the Mortgage to Rent (MTR) scheme that was published in February to see if it shed any light on this –
http://rebuildingireland.ie/install...the-Mortgage-to-Rent-Scheme-February-2017.pdf

Here's what it says about the repurchase option under the MTR scheme:-
_"Households can buy out the property at open market value after a period of 5 years"._

Well, that's not what this deal provides for – there could be a world of difference between the option price and the open market value of the property whenever the option is exercised.

Will the tenant forfeit this valuable repurchase option if they fall into arrears on their rent payments to Mr Hall's "charity"?

Also, what happens at the end of the 28-year lease period?


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## lukas888 (27 Sep 2017)

Sarenco,I suspect you very well know the likely outcome after the 28 year lease period.The original sitting tenants or their children/ grand children will continue to reside and woe betide any one who calls foul.


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## Bronte (27 Sep 2017)

Brendan Burgess said:


> Got a bit more information on the scheme from David Hall on the Today with Matt Cooper
> 
> The renters will be getting a 28 year lease
> The option price on the house will be in the lease - they can buy it back at any stage.
> ...



We will need a worked example to see exactly how this works. To see who is paying what.  Presumably you've figures ready for later. To confirm. Hall is really good at sounding very nice. I've no problem with people in trouble being hepled out, as long as they are can not pay versus won't pay.


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## Delboy (27 Sep 2017)

BB on TV3 now. Up against the host Ivan Yates who's certainly not hiding his colours in the debate


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## gahfan (28 Sep 2017)

I think the principles of keeping people in their homes is a good one.


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## Sarenco (28 Sep 2017)

Bronte said:


> We will need a worked example to see exactly how this works. To see who is paying what.


Strongly agree.  

The funding of this scheme is completely opaque and this is not acceptable where taxpayer money is involved.


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## The Horseman (28 Sep 2017)

Sarenco said:


> Strongly agree.
> 
> The funding of this scheme is completely opaque and this is not acceptable where taxpayer money is involved.



I don't have a problem with keeping people in their homes I do however have an issue with the idea that (a) the householder can repurchase the property at a point in the future equal to the purchase price of Icare, (b) the interest rate is 2% simple interest and (c) the differential rate of rent.

Why not say the property is purchased from the bank and the balance is written off, the householder can purchase the property at any point in the future at the current market value when they are purchasing it. Any "profit" ie the price Icare have paid v the sale price is returned to the State.

On the face of the existing proposal as I understand it, the householder can repurchase the property at any point in the future at today's discounted price while at the same time availing of a small differential rent. The householder just needs to save a bit every week and hey presto they can purchase the property.


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## Delboy (28 Sep 2017)

Yes, an example of this scheme in practice, from start to finish is needed.
And the costs of maintenance need to be worked into the example. Because I'm certain the 'tenant', as is the case with LA housing, will not have to fork out for maintenance and upgrades over the years. This adds up.

When Hall was on The Last Word with BB yesterday, he was practically gloating. Kept telling BB to 'wait for what I'm about to say, you'll definitely combust then'. He was in effect gloating I thought.
But did I understand him properly when he discussed the eventual discounted purchase price that the house would be available at to the 'tenant'...that the price would be agreed now (at a large discount) and inserted into the contract. And 28 years later the house would be available to buy at that same price, not allowing for time value of money/housing inflation since then?
Thats what it sounded like to me and if thats true it's scandalous. Why would any contract be set up in such a way.


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## Brendan Burgess (28 Sep 2017)

Delboy said:


> Kept telling BB to 'wait for what I'm about to say, you'll definitely combust then'. He was in effect gloating I thought.



I thought that was very odd indeed.  He said "You will need to be sitting down when you hear this one..." 

And it's very clear that the tenant is getting an option to buy a house at any time over the next 28 years at today's price. 

The weird thing is that I have heard commentators saying that people are "losing ownership of their homes" 

You can buy my home from me today, write off my mortgage and give me an option to buy it back at a discount on today's price. 

The guys who designed this, just don't understand finance. 

Brendan


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## Firefly (28 Sep 2017)

Do we have any idea what the rent will be for the houses? Is it based on the value of the home or prevailing market rents?

What will happen if rents are not paid?

Re: being able to buy back the home at any time, once the rent is adequate and is paid, I wouldn't necessarily have a problem with this as it's just like an interest only mortgage (again, once the rent would cover the interest and it is actually paid).


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## Delboy (28 Sep 2017)

So you bought a 400k house in the boom thats now worth 300k and has mortgage arrears of 80k after not paying anything for the past 6 years of accomm free living.

The arrears are written off.
The house is discounted to 200k for no real reason except it makes it cheaper for iCare and the LA to finance the purchase now.
The 'tenant' gets a heavily discounted rent v's market rates.
The contract allows for a 28 year lease with a written in stone purchase price of 200k which is not impacted by inflation/house price movements.
The LA covers the maintenance fees

It's an absolutely mind blowing deal. And yes, whoever in Govt agreed to it doesn't understand finance.

Even if money was tight in 28 years time and say you couldn't get a mortgage, you'd be mad not to go to the local loan shark for 200k. Buy the gaff and flog it soon after because it'll probably be worth at least several multiples of today's discount value.


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## Delboy (28 Sep 2017)

Firefly said:


> Do we have any idea what the rent will be for the houses? Is it based on the value of the home or prevailing market rents?
> 
> What will happen if rents are not paid?
> 
> Re: being able to buy back the home at any time, once the rent is adequate and is paid, I wouldn't necessarily have a problem with this as it's just like an interest only mortgage (again, once the rent would cover the interest and it is actually paid).


The rent will be set at LA levels for that area, income in the home etc.

Do you not have an issue with being able to buy the house at a large discount and at that set price even well into the future with no account for inflation


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## Firefly (28 Sep 2017)

Delboy said:


> The rent will be set at LA levels for that area, income in the home etc.



This could be a lot lower than someone renting the same house privately and I would have an issue with this. Again, a reward for not paying your way, and a kick in the teeth for others paying rent privately.



Delboy said:


> Do you not have an issue with being able to buy the house at a large discount and at that set price even well into the future with no account for inflation



The 10% discount is generous alright, but I don't have an issue with someone being able to buy the house outright at today's value, once the rent paid in the interim would match the interest that would have been charged and that the rent was paid in full. This to me would be akin to an interest only mortgage that would enable the mortgage holder to buy out the house at the end at today's price.

Edit, just to add...I would suspect giving the person the ability buy out the house at any time into the future is being done to ensure that the house is kept in a good condition. If you had no chance of being able to buy the house again there would be a lot less incentive to keeping the place well. All this would cost the council in upkeep. Just look at some of the social estates around the country!


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## Delboy (28 Sep 2017)

I guarantee you the LA will have the maintenance to cover on these houses. The scheme is so generous elsewhere, I'd be shocked if they didn't.

And isn't it going to be much more than 10%? Hall yesterday said he wouldn't disclose the rate as it was commercially sensitive but that to me just confirms that it's much greater.
Brendan mentioned 40% above and that some LA's have discounted houses by up to 60%.


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## Sarenco (28 Sep 2017)

Why is there a discount at all?

The published terms of the Department's MTR scheme simply provide that: _"Households can buy out the property at open market value after a period of 5 years". 
_
I've no problem with that but why does this scheme include an option to repurchase the property at a discount to today's market value at any time over the next 28 years?  It just doesn't make sense.

And on what terms is this scheme being financed?  This is a public housing initiative so I think we are entitled to know the terms of the deal.  We're paying for it after all.


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## avantarklu (28 Sep 2017)

So AIB have decided that there are hundreds of individual loans on their balance sheet that are non-performing and which they have no effective recourse to; are a blight on their balance sheet and should be repackaged and effectively sold to one borrower. Enter taxpayer-supported solution; i-Care.


Result – AIB’s bad debt issue is resolved and instead of having hundreds of non-performing loans, it has one single triple-A, low-risk, performing loan. 


AIB avoids costly repossession proceedings and also the avoids becoming a landlord with the associated costs and headaches.


i-Care gain ownership of the houses and the associated rent roll, which presumably is the backing for the loan provided by AIB.


Home owner becomes a tenant and i-Care becomes a landlord.



Even leaving aside the ridiculous buy-back option, the potential issues now associated with this new arrangement are wide-ranging:


Who pays for maintenance and upkeep of the property?
Who pays for insurance, management fees, property tax, water rates or any future property-based taxes?
What rights does the tenant have to paint and decorate, renovate or extend?
What happens when the tenant gets into arrears?
What happens when the family unit today changes over the coming years and the “4 bed, family home” is occupied by a single individual?
What happens in 28 years when the 40 year old homeowner (now) turns 68 years of age and hasn’t bought out the property? Is there anyone who expects that a 68 year old, or their adult-children will be evicted?


And where does i-Care get its funding from?


40% comes from the taxpayer (figure of €100m previously quoted)
60% comes from AIB and is backed by the hundreds of homes and corresponding rent roll


*The State are now going to spend €100m to solve a housing problem that doesn’t exist today. *

The borrowers currently have access to housing.
The borrowers do not face any realistic prospect of any change to those circumstances.
If the borrowers are expected to pay a level of rent under the new i-Care regime, then by paying a similar amount to AIB they would demonstrate to any judge a willingness to engage, thereby avoiding the prospect of an adverse judgement in court proceedings.



One’s personal views of the State’s responsibility to provide social housing is entirely irrelevant in this specific situation.

What is happening here is the transfer of wealth from the State to the private sector (AIB).

The problem here is with AIB and therefore it is theirs and theirs alone to solve. 

They should either enforce their rights under the affected mortgages or write off the debts. 

Passing the problem on to the State should not be an option. 

In the unlikely event that they are successful in repossessing any property, then and only then does the problem lie with the State.

When that happens, those affected join the housing list, the same as everyone else.

By providing this safety net, any responsibility on the part of AIB and the borrower to find a solution is removed.



So the next time there is a demand for €5m or €20m or €100m from some sector of society to fix a problem and the response is that the funding is not available; the reason is because that funding was given to AIB instead to solve a problem that did not exist.


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## Delboy (28 Sep 2017)

Brilliant post avantarlaku. Well put.
Should be sent to every media organisation in this country


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## Delboy (29 Sep 2017)

This was just discussed on the Pat Kenny show with his panel covering the week's events.

Stephen Donnelly (now of FF, previously Soc Dem and before that Independent) is all for Halls new scheme. It's a great idea and something that he and Michael McGrath and David Hall have been calling for for years. It should have been done years ago.
Sinead O'Carroll of The Journal is all for it too.
Gary Gannon (Councillor with Soc Dems) is another great supporter of the plan. His only question is whether there's an option for the children to buy the house at a later stage as 'the current owners will never be in a position to get a mortgage again or afford to buy back the house'

Kenny did point out that the option to but the house in the future at today's price was very a favourable proposition. But no one seemed interested in that


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## The Horseman (29 Sep 2017)

I think the writing is on the wall here. The Banks have decided it is not commercially viable to hold these properties, nor is it possible to repossess them.

If the Govt want more competition in the banking sector they are going about it all wrong, what bank in its right mind will enter a market were you provide a mortgage, can't get paid and can't repossess the house.

We will be back to the old days were you had three main banks with the line share of the market, wait and see bank fees going up and up and up, sure why not, where else can you bank.


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## Brendan Burgess (23 Jan 2018)

At the Oireachtas Finance Committee meeting today, AIB gave the following figures: 
325 people have filled out the questionnaire 

50 of these have been deemed suitable. 

Brendan


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## bijou (23 Jan 2018)

Can I ask for opinions please?
If a court has granted order of possession with a 1 month stay (back in Dec 2016) and you receive a letter from AIB out of the blue (last week) inviting you to call them to discuss this Mortgage to Rent "initiative", would you?  Or was this just a generic letter sent to a "list of people" on their bad books?
Just to be clear.... the order of possession was granted by the court in *Dec 2016*, there has been no contact from the bank, their solicitors, a sheriff/bailiff, the courts....... nobody since receiving the above possession letter.


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## Brendan Burgess (24 Jan 2018)

Of course you should if you want to keep the house. 

Brendan


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