First family to avail of debt deal will lose house but save home
A FAMILY that was days away from being evicted is to become the first in the country to benefit from a new deal that will see them rent their home instead.
Up to 10,000 people are eventually expected to benefit from mortgage-to-rent schemes which will see families lose ownership of their houses but rent them back from a local authority or a housing association.
In the first deal of its kind, subprime lender GE Money is to write off around €140,000 on the mortgage of a west Dublin family house and sell it to a housing charity, Cluid, in what is the first mortgage-to-rent scheme to be concluded in the country, the Irish Independent has learnt.
The house will no longer be owned by the family, but they will be able to stay in it. The family, who do not want to be named, have three children in primary and secondary school.
The deal was proposed by the New Beginning advocacy group made up of lawyers who represent people in trouble with mortgage debt.
It approached the Department of Environment and got the support of Housing Minister Jan O'Sullivan.
In this case, the father lost his job in construction, while the wife has a low-paid job. The family have built up around two years of arrears.
GE Money, which no longer offers loans in this market, had got an order for repossession in the High Court and was about to repossess the house.
The lender had given the family a loan of €240,000 in 2006, in an offer which included the mortgage and other debts using the house as security, the court was told.
The family ran up arrears of around €30,000 and was no longer able to meet the payments -- which were around €1,500 a month -- once the husband lost his job.
There was still some haggling over the purchase price to be paid by Cluid, but it was likely to be around €100,000, Ross Maguire of New Beginings said. The deal is to be concluded in days.
He added that he has pressed for an option to be put into the deal to allow the family to repurchase the house some time in the future if their circumstances change. Ms O'Sullivan said: "This is a welcome development. At least it shows that when someone is in real difficulty and they genuinely can't pay, there are some options."
She added that the Department of Environment was working with AIB and EBS on rolling out a pilot scheme for rent-to-buy schemes.
These would see people giving up ownership of their houses to the lender, but then renting back the same house from a local authority or a housing charity.
Ms O'Sullivan stressed that the new mortgage-to-rent schemes would be restricted to those who qualified for social housing.
Whether or not there will be a lot more mortgage-to-rent schemes will depend on the amount of funding provided by the Government, she said.
A spokesman for GE Money said: "GE Money cannot publicly comment on individual cases. Our arrears support team has a strong track record in helping customers resolve their financial or payment difficulties and works hard to put in place arrangements to avoid court action and repossessions, which is always a regrettable last resort."