Tánaiste Eamon Gilmore has insisted the Government is not considering introducing wide-scale debt forgiveness for struggling mortgage holders.
Mr Gilmore said today the Government was not in favour of "some kind of blanket write-off of mortgage debt forgiveness, as is being suggested by some".
However, he said the Government was looking at other ways of helping people at risk of losing their homes.
Earlier today, Minister for Social Protection Joan Burton called for a debt resolution scheme to allow struggling mortgage holders reach a deal with banks and avoid going to court.
Ms Burton said banks needed to show that they were willing to settle in a realistic way with the thousands of homeowners in distress.
UCD professor of economics Morgan Kelly has urged the Government to consider writing off mortgage debt, claiming it would cost up to €6 billion, but Minister of State for Finance Brian Hayes said that would pose problems.
Ms Burton said today a system where payments are limited to a percentage value of the property could incentivise people to make repayments.
“You then have a situation where when the house ultimately is sold, there’s a further settlement,” Ms Burton said. “But if somebody who is in distress then meets the requirements of the debt deal, then over a period of time there are periodic reductions and savings for them. In other words, there is a structure and there is an incentive for them to pay what they can pay.”
Ms Burton suggested Ireland could follow Iceland’s lead on forgiving mortgage debt. The Nordic state has it written into its IMF bailout agreement that it will write-off home loans to 110 per cent of the property.
The Minister said a resolution system to deal with the mortgage problem was needed.
“Instead of going to the courts, you can actually have an agreement between the debtor and the banker,” Ms Burton said.
Prof Kelly last week reignited the debate on debt forgiveness by claiming it would cost up to €6 billion.
Although Minister of State for Housing Willie Penrose suggested the scheme should be considered, Mr Hayes poured cold water on the idea. A spokesman for Minister for Finance Michael Noonan also indicated such a scheme was highly unlikely.
Latest figures show the number of people behind with their mortgage repayments for more than 90 days stands at almost 50,000.
Additional reporting: PA