What happens to NAMA, after it fulfils its raison d'etre of dealing with the bank's bad property loans, has always been an interesting question.

The idea was that it would vanish in a puff of smoke in 2020, but State agencies have a curious habit of taking on a life of their own.

This week the possibility that NAMA, which is led by CEO Brendan McDonagh, could morph into another creature became a reality.

NAMA has not been uncontroversial - serious questions remain about its enormous sale of property in Northern Ireland to vulture fund Cerberus and it has had spats with politicians.

But it has achieved its goal of dealing with bad property loans left by the banks.

Now the agency is to set up a new entity called House Building Finance Ireland to provide loans to builders and will be staffed with personnel from NAMA.

It will operate as a separate niche bank, lending €750m to developers of residential property over the next three years.

There are echoes of Anglo Irish Bank in the sense that the new outfit will deal with some of the country's biggest developers. Hopefully that is where the comparison ends.

NAMA has built up banking expertise handling large property projects, understanding tricky planning issues and ensuring it has adequate security in place to make sure loans are repaid.

It perhaps makes sense that it uses these skills in future.

At present there are only two banks, AIB and Bank of Ireland, lending significant sums of money to developers of residential property. The two lend a total of €1 billion for that purpose.

Advocates of the new entity argue the presence of a third bank in this area may make some sense because some builders say they can’t get sufficient finance to fund housing projects.

So far the Government is vague about the lifespan of HBFI. It could decide to close it in three years or it could easily continue. However, NAMA is still on track to shut in 2020.

The reason for starting the new operation is to tackle the serious lack of supply of new homes which is a key factor in the homelessness crisis.

But HBFI won't be financing the building of social and affordable homes, instead it will be funding developments built on commercial terms.

Judging by the escalating property prices many of the houses and apartments won’t be cheap.

Ten percent of the housing will be made available for social and affordable housing as is required under planning legislation.

But homeless charities ask a fair question: is this the most efficient use of €750m of State money addressing the country's most pressing social issue?

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