Housing Minister Jan O'Sullivan says a new mortgage-to-rent scheme launched by the government today will give certain low-income families "a way out of an impossible situation".
On RTÉ's News at One, Ms O'Sullivan said a voluntary housing body will buy the house from the bank at the current market rate.
But she was unable to say whether the borrower would remain liable for the outstanding negative equity portion of the loan, or if the banks would write off the debt.
She said she expected lending institutions to be realistic, but could not prescribe what would happen in that regard.
"That's a matter between the lender and the individuals concerned. That wouldn't be a matter for the State. What the State is doing is facilitating the family to stay in the home with the market rate and renting from the voluntary housing association."
She said the scheme was for a very defined section of the population, and will apply to around 100 families in its first year.
The maximum value of the property involved is €220,000 in the Dublin region and €180,000 in other parts of the country. The Minister said it was just one part of a wider strategy to deal with the mortgage crisis.
Clúid Housing Association has said that the scheme could prevent up to 3,500 families losing their home.
The scheme is aimed at those with unsustainable mortgages, households with no realistic possibility of ever being able to make full repayments.
Under the scheme a housing association buys the house and the family stays in their home as a tenant, paying an affordable rent to the housing association.
The mortgage to rent scheme is an option for families who have had their mortgage position deemed unsustainable, are eligible for social housing, agree to the voluntary repossession of the property and do not have significant positive equity.
Clúid recommends to those who are interested in the scheme that they contact their lender and that the lender will decide whether the mortgage is unsustainable.
A number of other criteria apply, for example, the household must qualify for social housing.The housing association was involved in the design and piloting of the Mortgage to Rent scheme.
Clúid's Head of Policy, Simon Brooke said: "Last year the Government placed housing associations at the heart of social housing provision. In the current economic climate this scheme really reflects how innovative solutions can prevent some people from losing their home."