THE STATE’S LARGEST retail bank is to sign up to the government’s pilot mortgage-to-rent scheme – hoping to alleviate the mortgage burdens on many of Ireland’s hard-up homeowners.
AIB, which is majority-owned by the government, said today it was working with the Department of Finance to participate in the scheme – which would see mortgage customers in severe distress hand over their homes in exchange for guaranteed tenancy.
The scheme was first proposed in the Keane Report on mortgage arrears, as a method of trying to ensure that families who had fallen behind on mortgage repayments did not end up being evicted from their homes.
While families participating in the scheme would lose the official ownership of their home, they would be assured of being permitted to stay in the home until circumstances approved.
AIB this afternoon said it was working with the Department of the Environment, which regulates housing policy, “to agree the timing of the initiative”.
The scheme is only proposed to extend to families who would now qualify for social housing, meaning that the majority of mortgage holders would not be entitled to take part.
Those who would, however, would be permitted to stay in their family homes – even though the bank has taken ownership of the property.
In those cases, banks would lease the homes back to the relevant local authority, who will treat the arrangement as if it was a typical council housing arrangement.
It is unclear whether banks would have to write down the difference between the value of the mortgages and the current market value of the house being taken over, or whether they would still be entitled to ask their new tenants to cover the difference.