He argued that the package would cost little in public spending, aside from Labour's repeated call for the pounds 5bn in council house sale receipts being released to build new homes and buy empty properties for rent.
The 80,000 empty repossessed homes should be used for the homeless by having lenders lease them to local authorities and housing associations.
Court orders for future repossessions should not be granted unless borrowers have received practical help and advice. The Lord Chancellor should consider inviting courts to regard the full term as the reasonable repayment period for mortgage arrears, not the 'often impossible' 18 to 24 months which many lenders offer.
Government action to cut the 'thicket' of legal barriers and regulation would allow an effective mortgage rescue scheme to be created, Mr Straw said. Lenders would provide a loan to housing associations which charge rent levels, subsidised where appropriate by housing benefit, providing lenders a 6 per cent return.
More than pounds 2m of taxpayers' money has been spent on rent for the former Department of Trade and Industry headquarters in Victoria Street, Westminister, during the last year despite the premises standing empty since they were vacated for refurbishment in September 1991.