iCare scheme keeps distressed borrowers in their homes

Almost 600 properties housing more than 2,500 individuals have been approved for a new scheme aimed at keeping distressed borrowers in their homes.

The scheme, iCare Housing, is a not-for-profit approved housing body that offers those facing repossession and who are eligible for social housing the opportunity to stay in their home as a tenant through the State’s mortgage-to-rent scheme.

David Hall, chief executive of the Irish Mortgage Holders' Association, set the scheme up in September 2017. So far, iCare has bought 19 houses from banks and vulture funds and converted the former owners to social housing tenants.

Another 571 houses have been approved and will be purchased in the next 18-24 months. This represents 2,500 people who have avoided having to avail of emergency accommodation, the organisation said.

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Mr Hall said iCare worked with AIB to secure funding under normal commercial terms before borrowing to purchase houses.

AIB provided an initial €15 million term loan facility for the purchase of housing from mortgagees, which includes a variety of banks and vulture funds. The State funds 30 per cent of the purchase via a long-term, low-interest loan.

Bank differences

Mr Hall said all of the banks participated and co-operated, as well as some vulture funds, but that there was “a radical difference” between a number of the banks.

“AIB, EBS, Haven and Permanent TSB have agreed confidential discounts above and beyond the normal mortgage-to-rent process to make this happen,” he said.

“In relation to the funds, Start Mortgages won’t take any discounts above about 10 per cent; Promontoria refuses point blank to engage; Mars Capital has fully engaged. In general terms, there is a lot more access to the banks.”

In terms of eligibility for the scheme, first a customer’s mortgage debt must be deemed unsustainable. Following an affordability assessment completed by the bank, the customer must be eligible for, and complete, the mortgage-to-rent process.

Tenant of iCare

Ownership of the customer’s home then transfers to iCare, and the customer becomes a long-term tenant of iCare. Any remaining residual mortgage debt, following property sale, is fully written off.

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

Homelessness campaigner Peter McVerry pointed out that a problem with the scheme is that its eligibility limits are “very low”.

“I think the scheme should be expanded to include affordable rent,” he said. “I don’t think the Government is giving this the commitment it requires. It needs to be the solution for the vast majority of mortgages in arrears for two years.”