NEW MORTGAGE TO RENT SCHEME

Speaking today . . . Paul Cunningham Chief Executive Home For Life

Arrears Statistics As at end Q2 2018 46,008 mortgage accounts in arrears of 90 days + 28,237 of these accounts represent mortgages in arrears of 2 years + 243 possession orders granted during Q2 2018

What is Mortgage to Rent? MTR was initially introduced in 2012 following a recommendation from the Keane Report Scheme designed to allow those with unsustainable mortgages and who qualify for social housing to remain in their homes as tenants with long term security of tenure 25,000 temporary arrangements due to roll over in the next 3 years. We believe up 25,000 of these accounts may be eligible Initially open to just AHBs. Completed cases from 2012-2017 were less than 300 MTR scheme was revamped in February 2017 as part of the Rebuilding Ireland programme Increased property valuation limits Increased flexibility of household composition Scheme opened up to private sector operators to drive volume in the sector operating Local Authority leases Home for Life was authorised on 4 July 2018 to participate in MTR

What is Mortgage to Rent? Mortgage to Rent is a Government scheme that aims to keep distressed mortgage holders in their current homes, mortgage debt free. These are homeowners who are at most acute risk of losing their homes through loan sales or Court processes as MTR is focussed on homeowners who are unable and are unlikely to be able to make their mortgage payments Under Mortgage to Rent the homeowner surrenders ownership of their home, has their mortgage debt written off and they become tenants of their Local Authority Homeowner pays an affordable income based rent to the Local Authority, a “Differential Rent”

Eligibility Criteria Homeowner(s) must have completed the Mortgage Arrears Resolution Process (MARP) with the lender Must be eligible for Social Housing Support in the local authority in whose area the house is located Key criteria is that net household income doesn’t exceed €25-€35k for single person. Additional allowance for additional adults and children in the home. Max €30-€42k net of tax Must not own any other property Must be living in a property that suits the homeowner(s) needs Cannot have cash assets worth more than €20,000 The property must be of a value no more than €280,000 or €365,000 for a house. €215,000 for an apartment or townhouse Property is in negative equity or a small amount of positive equity

Mortgage to Rent to Date A total of 4,221 cases have been submitted for processing to date 386 cases actually completed to date at Q3 2018. Additional 912 are actively being progressed Many cases declined are now eligible because of changes to eligibility criteria around reasonable housing need and property value Many cases previously declined because no AHB expressed an interest in acquiring the property In Q3 2018, 29 cases were completed with 39 completed in Q2 2018 and 10 completed in Q1 2018 Changes to MTR designed to inject pace and volume to the process working with the revised criteria and flexibility

KEY ASPECTS OF THE REVISED MTR SCHEME Key Aspects of New MTR Scheme Streamlined Administration for Applications Broad Eligibility Criteria Government Support Intention to be Implemented at scale Private Funding off Government Balance Sheet High social benefit

HOMEOWNER CONCERNS IN RELATION TO THE SCHEME Losing my Home Privacy Vulture Fund BORROWERS AREAS OF CONCERN If there are court proceedings these are ceased. The process is quick and can be completed within 6 months. All lenders (banks and funds) are now offering MTR as a solution for eligible homeowners. Courts will often direct homeowners to apply for MTR before an order is granted and MABS officials are present in Courts to assist homeowners

ESTIMATED MTR TIMELINES STARTING WHEN BORROWER COMPLETES APPLICATION FORM

MTR scheme – Stakeholder Value analysis socially responsible solution to household with an unsustainable mortgage Eliminates risk of being involved in a court process and becoming homeless Will receive the opportunity to have a life tenancy in the property from a LA Family of the homeowner are expected to obtain succession rights to remain as tenants in the property Will pay an income based affordable rent All outstanding debt owing on their mortgage will be written off when property is surrendered Repairs or maintenance will no longer be their cost or responsibility Will have the right to purchase the property at OMV after five years Family remains in the home and community without disruption Homeowners Government Increases the stock of social housing Increased foreign direct investment into the Irish economy contributing to economic growth Reduces the risk of homeless number increasing resulting from enforcement on family homes In the medium term the cost of the privately funded MTR is considerably lower than using AHBs Privately funded MTR is not treated as part of the calculation of net Government debt, which grants the state greater financing flexibility

MTR scheme – Stakeholder Value analysis socially responsible solution to household with an unsustainable mortgage Cost effective solution to dispose of the most distressed mortgages. Expected process time of the MTR transaction decreases from the previous 18 months to an average of six months. Socially responsible solution that will not negatively impact the banks reputation. The financial price of the loan sale will be priced at a level that offers the lender a better return than alternative strategies. Improves financial performance rations as the sale of the portfolio will reduce the non-performing loan (“NPL”) balances and result in a profit on the sale being recorded. Banks

MTR is a needed solution to Long term Mortgage Arrears Total Arrears (720 Days +): 25,480 Total MTR Completed: 386 Many of those in long term mortgage arrears are social housing eligible and would require to be housed by the relevant LA if they were to be evicted. MTR deals with this problem in a positive, efficient and dignified way. The above figures are from Central Bank Sept 2018

What are the Challenges we are Finding with MTR? Awareness, Awareness, Awareness! No promotion of the scheme as a solution. Role of MABS, Housing Agency, Ministers Murphy/ English, Solicitors, Debt Advisors, Advocates, Local Authorities ISI and PIPS advocating different solution when best outcome is often MTR AHB proposing to complete MTR for homeowners when not able to complete or unnecessarily slow in completing Separated couples require individual advice on the scheme

CONTACT ME Paul Cunningham Chief Executive Home For Life paul@homeforlife.ie +353 1 287 7692