A.E.M.A.

Association of Expert Mortgage Advisers.

Some comments from the Association of Expert Mortgage Advisers on Jan O'Sullivan's defensive press release

The Government scheme to help low-income families in mortgage arrears to stay in their home is effectively being strangled before it gets off the ground.  This is before it has even completed its pilot phase, just five months after being set up. While it believes that all parties involved should shoulder their fair share of the blame.  The primary blockages appear to be at government agency level. 517 people have applied for the scheme – but with so many different authorities able to delay or turn down applications, only one (1) case has actually been processed.

According to DJ O’Donovan of the Association of Expert Mortgage Advisers , “In our experience, cases that clearly qualify, which should take 4-6 week to sign off, are still outstanding with the Housing Association and Social Service after 8 and 9 months. We initially assumed that this was just down to slower service levels from public sector agencies getting used to a new process, but now believe that this well thought out service is not being allowed to work as intended.

AIB were criticised in the Oireachtas for only have 11 applications for this service, but if you consider that Jan O’Sullivan has capped the number at 100 identifying it as a pilot scheme. As it may never hit the targeted 100 cases, the government will be able to avoid having to ever fund it. The concept is presently the only long-term solution being presented to mortgage-holders in substantial difficulty, but with one successful case and an overall cap of 100 cases, the scheme appears to be little more than an extended government press release.

The Department of the Environment said that these are “complex legal transactions involving several parties – homeowners, lenders, approved housing bodies, local authorities and solicitors” – well, simply it and put someone in charge that’s accountable.

According to the AEMA, for this scheme to be successful, it will need an allocated budget and someone in charge of it.  The Banks are being blamed for its failure, but it seems more likely that this is primarily a funding issue. There are too many bureaucratic institutions and authorities any of which can block some or all of the application.

At the moment it is the Lender who has to approve the borrower as a suitable candidate for the scheme before the borrower can go to the Local Authority to be approved as a social housing candidate. With a stock pile of application sitting with the Housing Association, it would seem that the hold-up is occurring at this point.

Participating banks realise that in cases where no mortgage payments have been made for 12-24 months, the prospect of the local authority getting paid is questionable, the likelihood of the lender receiving a further amount for their negative equity element is extremely unlikely. Some banks are realistic about this while others are still afraid to make a decision. 

DJ went on to say, “As only one family has successfully applied for the Government's mortgage-to-rent scheme, we’re reluctant to even suggest it to those families that meet the criteria as they are unlikely to overcome the multitude of obstacles and unwilling agencies. Similar to the Government’s previous foray into the mortgage market, this also appears to be another smoke and mirrors scheme intended to plicate an unhappy electorate, rather than actually solve a real and growing issue.”

Mortgage to Rent scheme

Under the Government's mortgage-to-rent scheme, the ownership of the family home is transferred to a housing association, which then rents it back to the family.