Housing charities to bid for €1bn of AIB's bad loans in boost for struggling families

Colin Hunt: AIB boss is prepared to sell bad loans to a housing charity. Picture: Collins

Charlie Weston

Housing charities will be able to bid for a slice of an AIB €1bn non-performing loan portfolio for the first time.

The bank has engaged consultants KPMG, which has written to a number of not-for-profit groups which work with those in mortgage distress.

Until now the bank has sold toxic loans only to vulture funds.

But now it is to allow alternative mortgage restructuring groups such as HomeOptions, Arizun, Home for Life and the Irish Mortgage Holders Organisation to bid for the residential mortgages portion of the portfolio being sold.

The latest portfolio to be sold is codenamed Project Alder, and is understood to be valued at around €1bn. It is made up of non-performing residential mortgages, buy-to-lets, SME loans, commercial lending and real estate such as land banks.

Before the sale proceeds, distressed mortgage holders will be given a chance to engage with the bank and strike a restructuring deal which would mean their loans would not be sold. This is what happened with the bank's Project Beech sale to US fund Cerberus earlier this year.

Originally a €1.5bn portfolio, some €500m of residential mortgages were taken out after a large number of borrowers agreed last-minute deals with AIB. But around 220 owner-occupier mortgages were included in the sale in the end.

The latest sale will be the first time a leading bank here has explored the option of selling distressed mortgages to a not-for-profit housing body.

Getting the funding together will be a major challenge but a number of groups claim to have funding.

Those likely to bid include not-for-profit company HomeOptions. It has launched a mortgage-to-rent scheme which aims to buy homes of distressed mortgage holders to stop them being taken over by vulture funds.

Mortgage holders who qualify have to sell their home to the fund - but have their debts written off - and rent back the property from HomeOptions.

Private company Arizun is offering to buy the homes of those in unsustainable debt, write off their debts, clear their mortgages and rent the homes back to them. Arizun says the rents will reflect market rates.

The scheme applies to the squeezed middle who do not qualify for State support, so would not be able to get a State-backed mortgage-to-rent deal.

Home for Life is a private operator of the Government's mortgage-to-rent scheme. AIB recently agreed a significant debt facility with the firm, allowing it to buy up to 3,000 mortgage-to-rent properties.

Run by debt campaigner David Hall, the Irish Mortgage Holders Organisation is a not-for-profit organisation which aims to facilitate independent mortgage/debt resolution between lenders and mortgage holders.

It is a registered charity and has an ongoing relationship with AIB, trying to broker deals on behalf of homeowners in financial trouble.

Asked about the loan sale, AIB said supporting customers in difficulty remains a key priority and, where feasible, it will continue to implement sustainable solutions for customers who engage with the bank on a case-by-case basis.

"AIB is acknowledged as having the widest range of customer solutions in Ireland, including mortgage to rent and our joint initiative with iCare Housing, a not-for-profit approved housing body," it said. "We continue to explore other options which could enhance the solutions available to our customers."

It will be the fourth time AIB has sold off loans in recent years. The bank has €4.7bn in non-performing loans, down from €31bn in 2013.

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