Mortgage legislation to address a legal loophole "will not open the floodgates for home repossessions", Minister for Justice Alan Shatter has insisted.

Amid sharp exchanges in the Dáil about the Land and Conveyancing Law Reform Bill, Mr Shatter said it would reinstate the legal right of lenders in mortgages purchased before 2009 to go to court as a last resort to repossess mortgaged properties in major default. Repossessions would not be the first option available to banks where borrowers were in mortgage difficulties.

But Independent TD Shane Ross warned that banks could now “repossess at will and as they wish in spite of their behaviour in the past”.

He claimed the Bill fulfilled a campaign ongoing since 2010 to restore to the banks “the position of hegemony, leadership and domination in the financial world which they held up to 2007 and 2008”.

The Dublin South TD also claimed the main flaw in the Bill was "there will be no checks on the bankers when they decide who is to be repossessed or evicted".

A number of TDs highlighted concerns that banks would seek repossession of homes with equity where most of the mortgage had been paid off before financial difficulties arose.

The Minister acknowledged this was a possibility “but I sincerely hope this will not be the case and the Government will be monitoring the behaviour of the financial institutions” to ensure this and other unintended outcomes did not occur.

Fianna Fáil TD Billy Kelleher said that banks were “desperate organisations” fighting for their survival, while the Government “is hoping they will struggle on and that they will not need to be recapitalised further”.