Allowing debt-stricken mortgage holders to remain in their homes and pay rent makes no sense.
Consumer advocate Brendan Burgess claimed the mortgage-to-rent scheme was a "scam on the taxpayer".
His comments came after the announcement of an initiative between AIB, the Irish Mortgage Holders Organisation (IMHO) and iCare that aims to save customers with mortgage difficulties from losing their homes.
The enhanced mortgage-to-rent scheme has so far had 571 cases approved with a further 250 proposed cases, and another 19 completed in full.
Eligible customers, who have completed the process and qualify for social housing, will continue to live in their homes as long-term tenants of iCare Housing, which is led by mortgage campaigner David Hall.
The iCare mortgage-to-rent scheme has the backing of homeless campaigner Fr Peter McVerry.
Mr Burgess claimed those getting a mortgage-to-rent deal were equivalent to Lottery winners.
Housing charity iCare leases the property back to the occupants on a long lease, ensuring the former owners that were at risk of losing their home can stay in it long term and pay an affordable rent.
But Mr Burgess said: "Mortgage-to-rent is a scam on the taxpayer. It is a scam on the people who have already been on the housing list many years. It is a lottery win."
Those qualifying would effectively jump the homeless housing list, while there would be a disincentive to take up work, he claimed.
And banks and funds selling properties where the borrowers have defaulted would do well out of it, he said.
Mr Burgess said many of the defaulting mortgages are cheap trackers, so the interest costs to State bodies would be not exceed €3,000 a year.
Mr Hall defended the scheme. He said: "Thousands of people will be helped, and this will save them great suffering and inconvenience and save the State money."
To qualify for a mortgage-to-rent deal a borrower's mortgage must be deemed unsustainable, and have an income low enough to qualify for social housing.
These people avoid being evicted, and don't have to go on to the housing list.
Under the iCare scheme, those eligible will be able to buy back the property from iCare at a discounted price.