Company buying homes of distressed mortgage holders not flipping them for a quick profit, says management
The management of a company established to buy the homes of distressed mortgage holders and rent them back to their former owners insists that it has no intention of flipping properties to make a quick profit.
Arizun says that its new Stay In Your Home service, launched today, will instead offer a 'long-term solution' for those in mortgage arrears who do not qualify for government supports.
Cathal O'Leary, a director with Arizun, said that the company is focused on solving the issues facing many distressed mortgage holders.
The Stay In Your Home service will see Arizun take over the title of properties where the mortgage-holder is in arrears. The company will forgive debts attached to the property and the owner will surrender their property rights in exchange for a long-term lease, which would be for an initial six years and can be extended thereafter.
Rents would be based on the market rate and subject to existing rental market rules. Occupiers will have the option to re-purchase their homes in the future.
Mr O'Leary insisted that Arizun is focused on its clients and that it will not be seeking to sell off their assets to make a quick profit.
"Our fund is a long-term fund," he said. "It is more in the vein of utility management. I think of it more akin to a pension scheme."
Mr O'Leary said that the likelihood of a property being sold off is very slim.
"But, if it was to happen, it could only be done with the protection of the existing agreement," he added. "But, I must stress that is not our intention. This is a long-term plan."
There are approximately 28,000 mortgages in arrears of two years or more. The majority of these do not qualify for the government's mortgage to rent scheme, which is subject to strict rules.
Arizun's service is privately funded, with no State backing. €100 million has been secured from LCM Partners, a London-based investment firm. A further €400 million has been committed if the scheme takes off.
"It is a matter of when, not if," Mr O'Leary said.
He declined to elaborate on where the additional funds were coming from but said that discussions had taken place with a range of financial institutions, including some Irish.
The Arizun fund is regulated by the Central Bank.
