‘Ready-made solution’ for families in mortgage arrears exists, says insolvency expert

An insolvency expert, who was involved in a landmark High Court debt case, has urged local authorities to avail of an underused government-backed initiative to help ease the mortgage arrears crisis.

Personal insolvency practitioner (PIP) Alan McGee, who registered as Cork’s first PIP in 2013, said there is a ready-made solution which could help struggling families at risk of losing their homes.

“I believe there is great potential for local authorities to use the national mortgage-to-rent scheme which unfortunately has not been utilised in any substantial numbers,” he said.

“This appears to be because of perceived ‘red tape’ difficulties and the general unawareness of the initiative. I have met many people whose homes are at risk and who would be potential candidates for the mortgage-to-rent scheme.”

Under the scheme, people who are in negative equity and are having trouble paying their mortgage to a private lender can switch from owning their home to renting it as social tenants of a housing association, which buys the home from the lender. Those who pass the eligibility tests, and take up the option, no longer own their home or have any financial interest in it.

Mr McGee was speaking after helping to secure a landmark ruling in the High Court on Monday which resulted in a heavily indebted borrower overturning the veto of a bank which had blocked their ability to get a debt write-off through insolvency. The person at the centre of the case had €2.8m of debt.

His PIP, Kerry O’Neill of R Hendy & Co, had prepared a personal insolvency arrangement but the deal was blocked by venture fund Pepper, which was acting as agent for Pentire Property Finance Limited.

The debtor, represented in court by Mr McGee and Keith Farry, lodged the first Section 115A appeal to come before the High Court, and Ms Justice Marie Baker approved the application to overturn the rejection of the insolvency arrangement.

The ruling has resulted in the debtor, a married father of three, securing a write-off of half his borrowings. He will also be allowed retain the family home. He will surrender five investment properties and a commercial site

.

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