Successful MTR Case

I lost my job and was unable to make my mortgage repayments. I felt ashamed and was getting more and more stressed, as I tried everything with the bank but nothing worked. I really thought I was going to lose my home, and that I wouldn’t have a roof over my head. I swallowed my pride and went to MABS to ask for assistance. They were so helpful and understanding, I felt a weight had been lifted just talking to them about my debt problems. MABS went through all the options with me and the Mortgage to Rent (MTR) scheme seemed right for me. I could stay in my own home, pay a rent that is affordable, and possibly buy back my house in the future. The MTR scheme really worked for me, I don’t feel any different, and my house still feels like home. I’d tell anyone struggling like I was, to be brave and don’t be afraid to look for assistance.

Offer accepted. At conveyance stage:

My relationship broke down and my partner moved out. I could not afford the mortgage repayments on my own, and thought I was going to lose my home. I buried my head in the sand, and ignored all the letters from the bank, and even missed a court date about the repossession of my home. Finally, I went to MABS and brought all the letters from the bank with me, one of which suggested the Mortgage to Rent (MTR) scheme. To get on the scheme, my ex-partner had to sign a consent form so the property could be transferred to the bank, which took some time and held up the process a bit. But, the bank has just accepted an offer from an AHB on my home, so I am coming to the end of the MTR process and I am looking forward to paying an affordable rent and not worrying about mortgage repayments anymore. The MTR process is long with a lot of paperwork, but MABS helped with this.

AHB have expressed an interest. Midway point in process:

I was struggling to make my mortgage payments, but loved my home and didn’t want to move. I was in negative equity and wouldn’t have been able to afford to repay my outstanding mortgage debt, even if I did manage to sell my home privately. I knew it would be very hard to find somewhere to rent, and I would never manage to pay my debts and rent. I went to MABS for advice and they explained the different options to me. MTR sounded like a way out. I knew it meant I wouldn’t own my house anymore, but I was so happy I wouldn’t have to leave my home. An AHB has just expressed an interest in buying my house from the bank, so I am about half-way through the MTR process now. I’ve found the paperwork manageable so far, but would have liked more contact from the bank and housing body about the progress.

Personal Insolvency Arrangement (PIA) incorporating Mortgage to Rent (MTR)

Case Study 1

Greg and Sandra are married with grown-up children. Greg is 56 and Sandra is 57. Greg was a self-employed small builder in the lead-up to the financial crash. Greg had borrowed heavily to purchase land to build a number of houses. While he managed to build the houses, he was unable to sell them at a price that would clear the associated debts. Greg has tried to secure work in the construction sector in the years since his building business ceased trading, but he has been unable to find work.

Sandra works with the HSE as a Home Help assistant. She has worked with the HSE for 21 years. Her income is modest and does not provide a capacity to fund a restructured mortgage loan. Greg and Sandra met with a personal insolvency practitioner (“PIP”), who assessed their situation and advised them that a PIA was the best solution for them. The couple were able to avail of vouchers under the Abhaile Scheme.

Summary

Mortgage balance:€234,364
Current market value of property:€165,000
Negative equity:€69,364
Other debts (unsecured):€545,455
Monthly Household Income€2,369.32
Monthly ISI Reasonable Living Expenses:
Two adult household with no vehicle
€1,714.78

Solution

Principal:MTR for PPR (principal private residence)
Term:72 months
PIP Fees:€6,799.23
Other key features:Voluntary surrender of property.
All unsecured debt written off.

As part of the MTR process, on the coming into effect of this PIA, the debtors will voluntarily surrender their interest in the family home to the secured creditor, with the PIP facilitating this process. The creditor will sell the property the subject of their security to an Approved Housing Body (“AHB”) for an amount to be agreed between the creditor and the AHB. Following the purchase of the debtors’ family home by the AHB, the debtors will be offered a social tenancy agreement providing for the continued occupation of their family home with a social housing rent, subject to the AHB’s standard tenancy agreement terms and conditions. The PIP has allowed ample timing for the MTR process to conclude (PIA duration is 72 months). By delivering the MTR solution through a PIA, the PIP has ensured that all other debt belonging to the couple (including all remaining mortgage debt which may be outstanding after the MTR transaction completes) is dealt with.

During the PIA, the couple will be required to make a modest contribution of €291 per month – the equivalent of the social housing contribution they will be required to make once the MTR is complete. This will be used to contribute towards the PIP’s fees as the mortgage lender has agreed to a capital and interest moratorium on the mortgage to facilitate this.

Personal Insolvency Arrangement (PIA) incorporating Mortgage to Rent (MTR)

Case Study 2

Gavin is divorced and resides in his principal private residence (“PPR”). Due to the failure of Gavin's business and subsequent failure of his marriage, Gavin was unable to continue to repay his debts as and when they fell due. Gavin is in receipt of disability benefit from the Department of Social Protection.

Gavin contacted a PIP, who assessed his situation and advised him that a PIA was the best solution for him. He was able to avail of a voucher under the Abhaile Scheme.

Summary

Mortgage balance:€229,040
Current market value of property:€175,000
Negative equity:€54,040
Other debts (unsecured):€61,501
Total Monthly Income€815
ISI Reasonable Living Expenses:
One adult household with no vehicle
€938

Solution

Mortgage:MTR for PPR
Mortgage:
PIA Term:
MTR for PPR
12 months
Mortgage:
PIP Fees:
MTR for PPR
€1,414.50*
Mortgage:
Payment to unsecured creditors
MTR for PPR
€185.50
Mortgage:
Other key features:
MTR for PPR
Voluntary surrender of property will be in full and final settlement of the debt owing to them. All unsecured debts will be written off.

The property will be transferred to an approved housing body (“AHB”), under the MTR scheme within 12 months of the court approval date of the PIA. On successful completion of the transfer, the debtor will pay rent directly to the housing association and will continue to reside in the house as a tenant of the housing association but will no longer own the property.

The debtors contributed a lump sum of €1,600 which covers the PIP’s fee, with the balance to be made available to unsecured creditors.

The PIA was due to be completed in 12 months but was extended by a further 12 months to allow for delays in the MTR process.

* Please note that the PIP fee in this instance does not represent an economic or sustainable level, but reflects the generosity and goodwill of the PIP involved.

*Names and identifying details have been changed to protect the privacy of individuals.