‘The Conflict Of Interest Is So Dominant I Could Chip A Tooth On It’


From top: David Hall; AIB; Vanessa Foran

Yesterday, AIB/EBS, the Irish Mortgage Holders Organisation and iCare Housing agreed a deal which will see the bank buy out hundreds of homes from distressed mortgage holders.

Those homes will be then rented back to them.

David Hall, chief executive of the IMHO and iCare, described it as “sensible, practical solution” to the housing crisis.

Accountant and insolvency expert Vanessa Foran (her off the telly!), writes:

It will by now be a well-read story and well covered announcement about David Hall and his iCare Housing Agency launch with AIB/ EBS.

The inevitable spin will surely have spilled into all your timelines; therefore I feel obliged to comment as I have contributed on this type of solution, Mortgage-to-Rent (MTR) in the recent Housing Special hosted by Broadsheet on the Telly.

I’m not going to argue against the Mortgage-To-Rent (MTR) scheme set by the Central Bank themselves within the Mortgage Arrears Resolution Process (MARP) as I have brokered a number of them myself on behalf of distressed home owners.

But this work is all pro bono as there is no place or role for the Personal Insolvency Practitioner (PIP) in this process.

The Creditor Bank will pay a Solicitor and a Financial Advisor (usually the original Mortgage Broker) but they will not pay a PIP. Which is an insult to the legislation introduced to deal with Mortgage Arrears and Personal Debts; The Personal Insolvency Act 2012.

The offence is caused to me in two parts. I cannot progress a Personal Insolvency Arrangement (PIA) unless the Debtor(s) have complied with MARP. A body of regulations in the hands of the Central Bank of Ireland and can be changed at their whim and yet a whole section (Chapter 4) is beholden to it.

Secondly, this Legislation created the new profession of Personal Insolvency Practitioner to specifically manage insolvent homeowners in a process that attempts to keep them in their Family Homes. Yet we are not considered suitable parties for the Mortgage-To-Rent solution.

I brokered the few I have because either the Mortgage Bank insisted that was the only solution they were prepared to consider or that I couldn’t find a more local Voluntary Housing Association to purchase the house by way of a Voluntary Assisted Sale (this might also be referred to as an Assisted Voluntary Sale or a Consensual Sale).

Before I continue, I must advise, and David Hall’s Twitter feed over the years will confirm likewise, that he has a very poor opinion of PIPs and of my profession.

The current MTR process requires the Debtor home owner to surrender their property to the Creditor Bank, from where the Bank proceed to sell the property.

The Home owner does not get to agree the sale price of the most important asset they may ever own, or even control the biggest liability they may have; and that is something I cannot defend.

It is from my direct experience to date that I can confirm that it is not good value as the costs of the eventual sale, such as selling costs and conveying costs are charged to the outstanding debt of the home owner.

An additional burden on the Debtor is that they must get themselves onto the Local Authority Housing List, and I know of no MTR progression to date that took less than 15 months. Some Banks will forgive this outstanding debt, and I will tell you AIB/EBS is one of them, but many don’t.

The process I work on behalf of these qualifying clients, and where I have built a reputation and a portfolio of successful outcomes is with Voluntary Assisted Sales.

Here the homeowner is the Vendor, they agree the price with the buying Housing agency and convey the property themselves with a Solicitor representing them; the “Assisted” in these resolutions is the agreement from the Creditor Bank to allow the home owner to sell their own property.

Ideally it is to a local and active housing association that will keep the family in their community and within their support network, and they will have already gotten the family onto the Housing Lists before anything progresses; and so far so good.

What is happening with the Mortgage-To-Rent path to Social Housing is that financing the housing bodies like David Hall’s iCare is in the control of the banks and the private sector, and at National Level. Not in your local Authority or your local communities.

Social Housing should be community based and run; and from where they can negotiate their own finance options and make their own decisions. My experience, which is direct and hands-on confirms this.

Some immediate questions need to be answered amid the announcements and fanfare around this AIB-led Housing Agency.

Will there be a cap on value for house eligibility?

How will iCare manage a dispersed portfolio?

And if the now tenants do get afforded the opportunity to buy back the property, how will that future price be calculated?

If it was that easy to run a Housing Association, we would all be at it since there is 100s of millions out there available for the Voluntary Housing Sector to acquire properties from banks that have had them surrendered by desperate homeowners willing to do anything to stay in their homes.

The last time I checked it costs €600 to set one up.

What worries me most is not that iCare cannot be good landlords and won’t be able to manage tenancies and property assets in every county in the state; it’s the lack of Independence blatantly on display; the conflict of interest is so dominant I could chip a tooth on it.

It is no secret that David Hall’s Irish Mortgage Holders (IMHO) have always had finance from AIB and other banks. And now again with this new venture iCare.

AIB clearly have direct influence over all these activities, all parties can negate this and talk to us about Chinese Walls, data protection legislation, privacy policies etc., but there is no denying that a series of conflict of interest risks exist.

Of which the lack of Independence regarding the contractual sale prices paid and the property selections should probably be addressed before any family be allowed proceed.

Selling the properties, and then financing the purchase by an organisation that already secures significant funding from the lender is not in the best interest of the distressed homeowner, and it is most definitely not in the best interest of any realistic and long-term viable National Social Housing Strategy.

I sincerely wish iCare and IMHO every success, the more success stories we have in this profession the better, because it encourages more people who are in need to reach out.

I am an active member of this new profession but it is in everyone’s interest to ensure we all do our best work to ensure it is respected, valued and AT ALL TIMES independent and transparent.

It needs to thrive so that the Mortgage Arrears crisis can finally come under control; otherwise you have to accept that homeless families, accommodation shortages and social housing stock shortfalls as a permanent tattoo on our National Identity.

Vanessa Foran is a principal at Recovery Partners.  Follow Vanessa on Twitter: @vef_pip


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24 thoughts on “‘The Conflict Of Interest Is So Dominant I Could Chip A Tooth On It’

  1. Owen C

    “Some immediate questions need to be answered amid the announcements and fanfare around this AIB-led Housing Agency.

    1. Will there be a cap on value for house eligibility?
    2. How will iCare manage a dispersed portfolio?
    3. And if the now tenants do get afforded the opportunity to buy back the property, how will that future price be calculated?”

    I think two of these were answered in the original PR stuff put out alongside the announcement:

    1. cap on value of housing is €365k in Dublin (lower values elsewhere)
    3. the tenants can buy back the home at any stage in the future at the (potentially discounted) price which iCare bought off the bank at (which is bonkers – it means the tenant has a free in-the-money option on day one, and gets all of the upside, and none of the downside, for the next 30 years! Imagine a house wortgh 250k today, bought by iCare for 225k, and that appreciates 50% in the next decade – a not unlikely scenario given current trends – the tenant will be able to buy and flip that house with a 150k profit!!)

      1. b

        how is the market value set then? you can be sure icare are not buying at a premium from a distressed property portfolio.

        regardless, the very long option to buy at current market value is worth tens of thousands to any renter

      2. Owen C

        iCare specifically mention that they may be able to buy at a discount to market value. And they specifically mention that that discount will be given to the tenant should they seek to buy the home back in the future.

        “The customer has the option to buy back their home, at any time, at the price that iCare Housing paid for the property including any discounts negotiated between iCare Housing and the Bank.”

      3. Mag

        Incorrect, it will be sold back to the borrower (if they can raise the finance) at the price Icare paid for it.

  2. ollie

    So……………..if I am reading this right I can:
    stop paying my mortgage, run up arrears, then have the debt written off.
    sell my heavily indebted house to the bank, rent it for feck all, get a new job in a couple of years and buy my house back saving a fortune in the meantime.

    What a stupid scheme.

    I’ve a better idea: Pay your mortgage or have your property repossessed.
    Once repossessed, the remaining debt is written off.

    Also, this is just a buisness by HAll as the author has pointed out:
    Icare directors: Lucy Cronin, David Hall, Stephen Curtis, Arthur Mullan and Constantin Gurdgiev

    There must be a lot of profit to be made from this.

    1. anne

      You mention getting a new job but seem to imply stopping paying the mortgage is a choice… hmmm k.

      If the debt is written off isn’t it all the one if they can buy it back?

      1. ollie

        Anne, this scheme will encourage default.
        I owe 300k, house sold to the trust, debt gone. I then rent for say 10 years and buy the property back for a large personal profit.

        1. anne

          No it won’t.. this scheme is for people whose houses were going to be repossessed anyway. They didn’t forsee this option & decided to sit on their laurels for the past few years & quit their jobs.

          If you’re talking about it encouraging people doing this in the future, I doubt that also as they wouldn’t get the mortgage in the first place with deposit rules.

          The 70,000 people this affects is due to overpriced housing..they had little choice in needing a bloody roof over their heads.

  3. Andy

    Literally all her questions were answered yesterday in the press releases and in the very many public appearances from media shy (sarcasm) David Hall.

    iCare won’t be a landlord to the tenants. The lease is with the LA who will set & collect the rent from the tenant.

    This whole thing is an appalling scheme with the issues being glossed over using warm social justicy language – keeping families in their homes, keeping them in their communities, keeping them near their support networks, keeping them in suitable non-emergency accomodation etc

    There has been no figures on how many of these are in fact families or are single or couples,
    Most buyers during the boom, bought in areas away from their families,
    The appropriateness criteria normally set by the LAs is being discarded – you can have an extra 2 bedrooms and still qualify for this scheme

    The fact they can buy back at the discounted sales price is a complete scandal. While the sale of council houses was a scandal, at least the discounts those people receive are a discount to the market value – these guys get a 28 year option to buy at a discount to todays market value. This is a pure gift to these defaulters.

      1. Owen C

        There is/may be a discount

        “The customer has the option to buy back their home, at any time, at the price that iCare Housing paid for the property including any discounts negotiated between iCare Housing and the Bank.”

    1. v.pip (sometimes off the telly)

      Hello Andy
      I wonder if you could detail out this Lease Back with the Local Authorities for me
      I have made inquiries with colleagues in Housing and the only agreement they are aware of is the Payment & Availability Agreement that iCare or indeed any other Approved Housing Body needs from the Local Authority before they can proceed with a purchase of a property to be used for Social Housing

      In which case iCare will most definitely be the Landlord and responsible for the asset; and of course maintaining its condition, and collecting the rent.

      For others who took the time to answer, let me also advise that Housing Sections are always very diligent on correctly identifying the actual accommodation needs of the Tenant.
      an example of this might be a lone parent with one teenager being housed in a 4 bed detached bungalow. This might and in most cases in my experience would, be regarded as over accommodation and the occupier may be rehoused into a 2 bed and a family of 6 might then be placed into that 4 bed bungalow.

      Likewise with tenants with special needs; accommodation must match their actual and full requirements

      1. scottser

        the one flaw in having a local authority assess housing need, is that the assessment becomes no longer valid once a tenancy is created. in my view, having worked in housing allocations for a number of years, is that assessment of housing need should be ongoing, even when you have been housed.

        we have situations whereby if you have been allocated an offer of social housing support of any type – RAS, HAP, Council or Voluntary Housing, you are free to go and work and save up, buy a house and not be compelled to live in it. Furthermore a tenant’s contribution is capped under the differential schemes, so a situation can arise whereby a socially housed tenant can derive an income from a second property and while this is taxable, that money is not directed by law to be used by the tenant to fund their own housing need.

        The MTR scheme is another flawed add-on to an already absurd housing system and does nothing to address the obvious potential for corruption.

  4. v.pip (sometimes off the telly)

    Hi there
    Thanks for closing off some of those questions
    Unfortunately all those press releases mentioned weren’t circulated to most of us within the sector.

    I’ll be on the show this evening and hopefully we’ll be able to focus on my intended talking points of the article; Conflict of Interest : influence risk between AIB/ EBS and iCare, and lack of Independence.

    Thanks again

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