I am seeing on a far too regular basis the distress caused to families resulting from mortgage repayment difficulties and the threat of repossesion of their home. The Mortgage to Rent Scheme has the capability of providing a practical resolution for many of these families, however the scheme is not been given the opportunity to succeed. My recent press release regarding the issue is below........... Fianna Fáil Meath County County Councillor Sean Drew has described the Government’s “Mortgage to Rent” scheme for distressed borrowers as an abject failure following confirmation that nationally just 42 cases have been fully concluded under the scheme since its inception in July 2012. While a number of other cases are reported to be in the pipeline the overall take up of the scheme remains very low. It was originally envisaged that the scheme would facilitate approximately 500 cases a year with a total of 3,500 over seven years. Under the mortgage-to-rent scheme people in difficulty with the mortgage payments can switch from owning their home to renting their home as social tenants. Cllr. Drew stated, “There are over 35,000 households nationwide who are more than two years in arrears on their mortgage. Many of these are families living in Meath and the reality is that they face a very high risk of seeing their home repossessed. While there is no one size fits all solution, the Mortgage to Rent should be a viable option for some families in these circumstances. As it stands at the moment, the scheme is having no discernible impact on the mortgage arrears crisis. Less than 2% of cases put forward by private lending institutions for consideration under the scheme have been brought to conclusion. This is due to a combination of bureaucracy between the parties involved and unnecessarily restrictive rules which apply to its operation. “There are a number of specific difficulties with the scheme as it is structured. One significant one is the maximum current market value which applies in Meath of €180,000. A large number of applications are being ruled out on this basis. There are also problems around the restrictive nature of income limits for participants and also the fact that some of the lending institutions are not offering the mortgage to rent option to their distressed mortgage holders. It is also questionable whether adequate funding is in place for the scheme should these difficulties be ironed out. “It is a big step for a family to give up ownership of their house given that they may have put their life savings in to the home but the voluntary housing associations have indicated that, in the completed cases to date, tenants report being pleased to have removed the threat of repossession and they are able to remain in the family home. I personally have been advising and assisting a number of local householders who are keen to avail of this option in resolving their mortgage difficulties. The scheme has significant potential to provide viable and practical solutions but it is simply not being realised at the moment. “The banks also need to step up to the plate and actively support the scheme. In this context the question of what happens to the residual debt once the property is sold to a housing association appears to be a major stumbling block. The banks have to cognise that in some cases the debt is irretrievable and they will have to write off a proportion of it. To date they appear to be very reluctant to recognise this fact.”
Posted on: Thu, 31 Jul 2014 23:13:34 +0000
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