http://www.right2homes.com/
So, the proposal contained in this Bill is as follows:
1 Establish a new standalone Entity – The National Housing Co-Operative Society
2 Acquire ALL Principal Dwelling House Loans (PDH’s) and ALL Buy To Let Residential Loans (BTL) in arrears over 360 days.
3 The figures are as follows:
(Figures are per Central Bank at 31/12/2016 issued 16/3/2017.)
Number of accounts: 59,000
Balances outstanding: €13.9 Billion.
4 Purchase Price of Mortgage Book:
a) From Vulture Funds
These firms would receive the price paid by them to the Banks/Building Society with an appropriate adjustment based upon cost of funding and time in existence.
b) From Banks
Based on Balances outstanding at 31/12/2016 minus accumulated Bad Debt Provisions advised to Central Bank PRIOR to 31/12/2016 verified on a case by case examination covering all accounts in the specific categories of accounts being acquired. All additional costs incurred and debited against customer accounts to be deducted from sale price.
5 Establishing the money value of the purchase:
Accounts +12 months
Number of accounts Balance O/S
Estimated Written down value @50%
12K €2.3 B.
€1.15 B.
Accounts +24 months
Number of accounts Balance O/S Estimated written down
value@30%>
47K €11.6 B. €3.48B.
Total: 59K
€13.9 B. €4.63 B.
Rounded to a purchase cost of €5.00 B.
The final cost of the purchase would be established after examination of figures in Central Bank and the Lending institutions in order to cross check for accuracy of Bad Debt Provision figures. The exercise would be completed on a no profit no extra loss to Banks i.e. neutral in their respective Balance Sheets.
FUNDING ARRANGEMENTS
NTMA to be mandated to negotiate on behalf of the Co-Op, but not to underwrite in any way, a Secured Property Bond to raise the total needed through the ECB/EIB with a combination of 15 year and 20-year fixed interest rates.
At current available interest rates the cost of borrowing this sum should not exceed 2% fixed.
SECURITY FOR THIS PROPERTY BOND
The borrowings under this arrangement to be secured by a charge over the properties being acquired from Banks and Vulture Funds.
Note: Essential as a minimum that the “Buy-In-Values” be achieved in order to provide a margin of security. Hence NO NEGOTIATION over price, unless at a lower value.
This will allow the Property Bond to stand alone and be without Government Guarantee and thus be Off Balance Sheet.
EFFECT ON BANKS AND VULTURE FUNDS.
Lest there be concern about the impact of this transfer from the Banks and Vulture Fund’s on their respective Balance Sheets the following would apply.
- No Profit or Loss to V.F’s. They exit the Irish Market early.
- Banks would receive a sum calculated as the lesser of 4 (b) or 5 above.
- Banks would not incur new losses because of this exercise.
- Neither would they make any profit write-back as a consequence of any rise in property values.
- Banks would receive a big profit boost arising from the reduction in the cost of managing 59,000 accounts with all the attendant internal costs being eliminated. The same comment would apply to the mountain of external costs being incurred – Legal/Solicitors costs and expenses etc...
- A very significant infusion of new free capital would accrue to the Banks as a result of this sale. It would also assist Banks to come more quickly into accord with new ECB requirements.
- The New Capital should be “ring fenced” by Government to require Banks to provide low interest rate funding for New Social & Affordable Houses to be built to relieve the pressure on the lower end of the housing market and other necessary socially desirable projects, which are not the subject of this document.
For No Fault – Defaulters and for Judgment Mortgagors whose homes are about to be repossessed, this Bill rolls out the Mortgage To Rent option on an industrial scale.
The draft Bill clearly describes the legal architecture but, as a legal text, is still a work in progress.