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things the Government has to do to save troubled homeowners. . .

1 Get the banks to offer debt-for-equity swaps. In return for writing down the mortgage the bank takes a share of the home. This would allow homeowners who can pay some, but not all, of their mortgage to keep their homes.

2Force the banks to allow hopelessly indebted homeowners to sell their homes at a loss. The banks would accept the sale proceeds in full and final settlement of the debt and write off the outstanding balance.

3Order the banks not to extend repayment periods. Over 60pc of all mortgages granted to first-time buyers between 2005 and 2008 were for more than 30 years.

With 63pc of the principal of a 35-year mortgage still outstanding after 20 years, extending the repayment period for even longer periods would have a minimal impact on the monthly mortgage repayments.

4Target debt forgiveness at first-time buyers. First-time buyers who bought their homes between 2004 and 2008 need help badly.

They are saddled with huge mortgages on properties which have lost half or more of their value. Any debt write-downs, or debt forgiveness in bankerspeak, should be targeted at this group.

5Ensure that only those who can't rather than won't pay are helped. Nothing will destroy public confidence in any programme of debt forgiveness or other assistance for distressed homeowners faster than the sight of those who lived high on the hog during the boom years benefiting.

The Government and the banks must be utterly ruthless in dealing with those who won't, rather than can't, pay.