BANKS could be set to take over thousands of family homes and then rent them back to families under a new government plan aimed at easing problems for those in mortgage arrears.
AIB is set to become the first bank to sign up to pilot the new home-rescue measure, making the State the biggest landlord in the country.
Under the scheme, which was reported on by the Irish Independent, families will lose ownership of their homes but they will not have to move out and their neighbours need never know that they have signed up for it.
The house will be taken back at its current market value but families will still owe whatever is outstanding on their mortgage.
Up to 10,000 families at risk of being evicted from their homes are eventually expected to come under the plan.
This will be on top of more than 125,000 existing local authority houses owned by the State.
The mortgage-to-rent scheme was a central recommendation of last month’s Keane Report on mortgage arrears from the Department of Finance.
Families that avail of this scheme would have to agree to voluntarily give up ownership of their home. However, only those who meet the criteria for social housing would be able to benefit from the new scheme.
The home would be valued on the basis of the current market value. This would mean that people who enter into the scheme will probably still owe money to their bank once the house has been taken back by the lender.
Such a shortfall will have to be dealt with through new bankruptcy schemes that are due to be introduced.
Once the bank takes ownership of the home, the property would in turn be leased by the bank to a county council.
A 20-year lease is suggested in the Keane Report.
The county council would rent back the house to the former homeowner, with the rent amount based on the means of the family. This will mean that those who have lost their jobs will end up paying low rents.
Effectively, those in the scheme will become social housing tenants – with the difference being that they will be renting their former home.
If it is judged that the family can only afford to pay some of the open market rent amount, the rest will be paid to the county council by the Department of Environment and Local Government.
Some 500 houses are to form part of the scheme over the next few months, but eventually around 10,000 people could benefit from it.