People with high mortgage arrears are not applying to a government-backed scheme that allows them to stay in their homes as renters – because they can get away with paying nothing, it is claimed.
Ortgage activist David Hall said the government is behind on its target for the mortgage-to-rent program because homeowners in financial distress don’t see a realistic risk of their homes being repossessed.
The program means people don’t have to leave their homes and instead become renters, with most deals involving debt write-offs.
However, according to figures published on the housing agency’s website, only 223 cases of mortgage payments were completed in the first six months of the year.
This is down from 280 mortgage-to-rent deals completed last year.
The government’s Housing For All strategy commits to providing 1,000 mortgage-to-rent cases per year. However, around 14,000 home mortgage accounts are in arrears for five years or more.
Private company Home for Life and nonprofit iCare Housing, which Mr. Hall runs, completed 80 percent of mortgage leases in the first three months of the year.
Mr Hall said it was difficult to get people to sign up for a mortgage to rent while the banks weren’t looking into it, nor were they pushing for redemptions.
“Currently, there are virtually no withdrawal procedures. So why should defaulting people be persuaded to give up ownership of their house to rent if they don’t pay anything?” he said.
He estimates that up to 6,000 people with long-term arrears have not paid lenders, meaning they are living rent-free.
But Mr Hall said banks and those with long-term arrears have been reluctant to do mortgage-to-rent deals. Most deals are done with credit service companies that work for vulture funds.
Mr Hall said: “Trying to convince someone to give up ownership of their house and pay rent when they no longer have negative equity is very difficult. Many of these people have not paid anything for 10 years.”
The fact that so many are behind in the long term gives people a sense of security. Around 26,000 home mortgage accounts are in arrears over the long term. “Why would anyone apply for a mortgage to rent when they’ve lived in the house for free for 10 years?”
The latest figures from the central bank show that in the last three months of last year, 344 defaulting mortgage accounts filed for legal action.
“The majority of accounts with mortgage arrears are not currently the subject of litigation,” the central bank said in its latest arrears statistics.
The cost of foreclosure proceedings, the length of time, and the reluctance of the courts to issue foreclosures made banks reluctant to initiate proceedings.
Pepper and Start Mortgages, which services thousands of delinquent mortgages and owns vulture funds, facilitates most cases.
Home for Life chief executive Paul Cunningham said mainstream lenders have been slow to adopt the program because 88 percent of current deals have been arranged by lending service firms.
He said: “The government supports the mortgage-to-rent scheme. In the Housing for All plan, the Department of Housing stated that it aims to achieve an average of 1,000 completions per year for the remainder of the government’s term.
“We believe that the goal can be achieved if there is greater awareness of the system among those who are long-term defaulters and a greater number of mortgage lenders show a high level of commitment.”
A spokesman for Housing Secretary Darragh O’Brien said the program is demand-driven and enrollment reflects the progress of individual borrowers through the mortgage arrears resolution process and, in certain cases, court cases. Those processes have been affected by the impact of the Covid-19 pandemic and this is now reflected in the cases being added to the scheme, the spokesman said.
He said the department is working both internally and with the Authorized Housing Association (AHB) sector on a number of initiatives to improve their participation rate in the program “to help the AHB sector meet this challenging goal.” .
https://www.independent.ie/irish-news/state-is-well-behind-target-on-its-home-rentals-scheme-as-mortgage-lenders-in-arrears-are-paying-nothing-41883269.html The state is far behind on its home-lease program as arrears mortgage lenders “pay nothing.”