GE Money is set to become the first lender in the country to write off mortgage debt to allow a West Dublin family to rent their home instead.
The family were days away from being evicted but have now had €140,000 written off their mortgage with GE Money selling it to housing charity, Cluid, in what is the first mortgage-to-rent scheme to be concluded in Ireland.
According to the Irish Independent, up to 10,000 people are eventually expected to benefit from mortgage-to-rent schemes which will see families lose ownership of their houses but rent them back from a local authority or a housing association.
Under the terms of the deal, the house will no longer be owned by the family, but they will be able to stay in it. The family have three children in primary and secondary school.
The deal was proposed by the New Beginning advocacy group made up of lawyers who represent people in trouble with mortgage debt.
It approached the Department of Environment and got the support of Housing Minister Jan O’Sullivan.
In this case, the father lost his job in construction, while the wife has a low-paid job. The family had built up around two years of arrears.
GE Money, which no longer offers loans in this market, had got an order for repossession in the High Court and was about to repossess the house.
The lender had given the family a loan of €240,000 in 2006, in an offer which included the mortgage and other debts using the house as security, the court was told.
The family ran up arrears of around €30,000 and was no longer able to meet the payments of around €1,500 a month once the husband lost his job.
There was still some haggling over the purchase price to be paid by Cluid, but it was likely to be around €100,000, Ross Maguire of New Beginings said. The deal is to be concluded in days.
The Department of Environment is understood to be working with AIB and EBS on rolling out a pilot scheme for rent-to-buy schemes.
These would see people giving up ownership of their houses to the lender, but then renting back the same house from a local authority or a housing charity.