Mortgage-to-rent scheme ‘threatened by pillar banks’

The failure of bailed-out banks to get behind the Government’s key mortgage-to-rent scheme risks turning debt-relief initiative into a flop, ministers have been warned.

Mortgage-to-rent scheme ‘threatened by pillar banks’

So far, just one property has been transferred under the Government action plan — despite predictions some 200 family homes would by now have switched under the scheme.

Chairman of the Dáil’s influential environment committee, Ciarán Lynch has expressed alarm at the slow progress of the initiative and lays the blame at the doors of nationalised banks like AIB and Bank of Ireland.

Mr Lynch believes they are dragging their feet because they have yet to face up to reality in the way sub-prime lenders have.

The Cork TD says the banks’ attitude is deepening mortgage misery for families already struggling. “It risks becoming a flop unless the pillar banks start to engage with it. The expectation was that some 200 properties would be involved now.

“To date just one transaction has been made, and that was with a sub-prime lender. The sub-prime lenders are showing more reality and it is the pillar banks like AIB and Bank of Ireland that seem reluctant to engage with the required realism and urgency.

“Those banks must now come forward with targets to show how they will address this,” Mr Lynch said.

The Labour TD said the scheme gave the chance to lessen the trauma for those caught in mortgage misery.

“It is not for everyone, but works for those who need it because they can remain in their usual house and do not have to go through the upheaval of moving, and changing schools, etc, just because they can no longer pay the mortgage.

“The dwelling is transferred to an agency and the people involved pay rent to the agency instead of the mortgage,” he said.

Environment Minister Phil Hogan said in a parliamentary response that only a trickle of mortgage-to-rent transfers were happening.

“More than 60 cases are currently being processed under the mortgage to rent scheme. One case has been fully concluded and a further eight are expected to conclude shortly with purchase prices now agreed,” he said.

The Government’s response to the mortgage debt crisis has come under heavy criticism for lacking speed and depth. Those working with struggling families say ministers need to show much greater urgency and flexibility in dealing with the situation.

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