From AIB's website announcing the set up: (
https://aib.ie/icare-housing)
Quote:
If a customer is eligible for, and completes, the Mortgage to Rent process, then:
Ownership of the customer’s home transfers to iCare Housing
The customer becomes a long-term tenant of iCare Housing
Any remaining residual mortgage debt, following property sale, is fully written off
The customer has the option to buy back their home, at any time, at the price that iCare Housing paid for the property including any discounts negotiated between iCare Housing and the Bank.
I get that David Hall is doing this all for charity and that it's only going to help those eligible for social housing, but, now that the above is deemed acceptable debt write off by both one of the main banks and the government what is to stop somebody doing the same for profit. I.e
Big Bad REIT purchases a loan book and says:
Voluntarily surrender your house, ownership transfers to Big Bad REIT.
Customer becomes a long term tenant of Big Bad REIT at market rental value.
Any remaining residual mortgage debt, following property transfer to Big Bad REIT, is fully written off.
If customer agrees now with no messing and no missed rental payments, customer has the option to buy back their home, anytime after 5 years, at the price + 10% that Big Bad REIT paid for the loan including any discounts negotiated between Big Bad REIT and the Bank.
The small print:
a) If you turn this deal down and we immediately begin repossession proceedings with no write down.
b) If you accept this deal and miss a rental payment we will evict you like any other tenant.
Certainly if I was running a vulture fund with a pile of delinquent mortgages I'd be looking at this, happy that David Hall and the government had set a precedent.
I'd go as far as to publicly ask the government to endorse the plan, lauding Big Bad REIT for write downs.
Happy days. Get a cracking yield + possible 10% return on investment or a guilt free repo.