The final report from the Expert Group on Mortgage Arrears and Personal Debt says the group is not recommending a formal debt forgiveness scheme.
The report from the group, chaired by Hugh Cooney, issues recommendations on measures to help in dealing with the difficulties created by the country's growing level of mortgage arrears.
The report has concluded that arrears levels will persist for some time and may get worse before they get better. However, it says that repossession levels in Ireland remain substantially lower than those seen in the UK and it also found that forbearance is working and is having a beneficial impact.
Today's report says that around 90% of mortgage accounts are being repaid in accordance with their contracts and and two thirds of rescheduled loans are paying at least full interest on their accounts.
In the key recommendations in today's final report, the expert group says that a deferred interest scheme should be introduced for borrowers who can pay at least 66% of the interest on their loan. This would give distressed borrowers five years to get back on their feet.
Banks representing 70% of the mortgage market - AIB, Bank of Ireland, Permanent TSB and EBS - have signed up to the reforms. Under the deferred interest scheme, borrowers can defer repayment of the rest of the interest and the capital for up to five years. Interest cannot be charged on the outstanding interest.
When the accumulated amount in the deferred interest account is equal to a total of 18 months interest, or when the borrowers have been in the deferred interest scheme for five years, the mortgage will be categorised as unsustainable.
Another significant measure is the setting up of a non-judicial bankruptcy procedure. This will be a non-judicial debt settlement procedure and enforcement system which would be an alternative to bankruptcy and apply in most cases. The group also recommends new and modernised bankruptcy legislation with less punitive approach.
It also urges the Department of the Environment, Heritage and Local Government to quickly implement new regulations which will enable borrowers at risk of losing their homes to become eligible for social housing assessment before a repossession order has been made.
It also says that further consideration should be given by lenders to facilitate trading down by borrowers who are in negative equity and for who such a move would result in more affordable monthly payments.
The report says a new mechanism should be put in place to allow repossessed borrowers to stay in their homes for a time, which would allow the housing authority to find another appropriate home.
We are committed to solutions that are fair and appropriate to the current circumstances of Irish homeowners,' Finance Minister Brian Lenihan said.
'The Government accepts the group's recommendations and wants to see them implemented without delay,' he added.
In the group's initial report - published during the summer - it said that all lenders must develop a mortgage arrears resolution process (MARP) to provide a framework for handling arrears and pre-arrears cases. It also said that lenders must not apply penalty interest of arrears charges to borrowers who are taking part in MARP.
The first report also said that lenders must not make borrowers give up their low cost tracker mortgage or other existing product if it would the borrower at a financial disadvantage.
5.1% of mortgages in arrears by September
New Central Bank figures show that by the end of September 5.1% of the country's mortgage accounts were in arrears for over 90 days.
The Central Bank says that of the 789,000 mortgages in the country, 40,472 were behind in their payments for more than 90 days. This compares to a figure of 36,438 up to the end of June.
Today's figures also show that 3.6% of mortgage accounts were more than 180 days in arrears.
In value terms, €7.8 billion was owed in relation to all accounts more than 90 days in arrears, of which €5.5 billion was owed in accounts behind on their payments for more than 180 days.
Today's figures show an increase of 2.1% in the number of formal demands which have been issued by lenders, bringing the total number outstanding to 5,576. There was also an rise in the level of outstanding arrears cases were court proceedings were brought. By the end of September these cases rose by 1% to 3,054.
The Central Bank says that in the three months from July to September, mortgage providers applied for court proceedings in 210 cases. This is an increase of 23.5% on the number of cases reported in the months between April and June. It adds that these cases have debts totalling €7.8m built up on mortgage loans that equate to €76.9m.
Frank Conway, a director of moneycoach.ie, said the situation was becoming more difficult. 'Since Q4 2009, there has been a 41.5% rise in the number of mortgage holders who are 90 days or more behind on their mortgage repayments, he said.
He said an estimated 75% of mortgage holders in Ireland were on variable interest rates and predicted that many more home-owners would be tipped into arrears once European Central Bank rates rose.