Home owners who fall behind in their mortgage repayments but who "remain engaged" with their mortgage provider will be given six months' grace before legal action is taken, the Irish Banking Federation said today.
The federation published a "statement of intent" this morning that it described as "a further reassurance" to homeowners who find themselves unable to maintain mortgage repayments on their principal private residence.
IBF chief executive Pat Farrell told the Oireachtas Committee on Economic Regulatory Affairs this afternoon the measures would give further assurance to mortgage borrowers who are having difficulty making their monthly repayments.
He said banks which are members of the IBF had agreed to wait six months from the time that the loan falls into arrears before taking legal action against mortgage borrowers who could not meet their repayments.
The IBF said 10 banks had signed up to the plan, which will involve the lenders working with distressed borrowers who raised their problems with the banks at the earliest opportunities and agreed to a solution which would be assessed every six months.
Allied Irish Banks and Bank of Ireland had agreed to wait 12 months under the terms of their €7 billion recapitalisation by the Government last February.
The other banks to sign up to the IBF's "statement of intent" on a six-month period of grace are Dutch-owned ACC Bank, the UK-owned banks Ulster Bank and Bank of Scotland (Ireland), Danish-owned National Irish Bank and Belgian lender KBC Bank Ireland.
Three other guaranteed domestic lenders - Permanent TSB, EBS building society and Irish Nationwide Building Society - have also signed up.
Fine Gael TD Kieran O'Donnell, a member of the Oireachtas committee, said that there was "nothing new" in the statement and that it had already been in place for the two main banks since the recapitalisation last February.
Mr O'Donnell and his fellow committee member, Labour TD Sean Sherlock, called for the statement to be put on a statutory footing.
Mr Farrell unreservedly apologised for bank customers, shareholders and the wider community being let down by the banking sector. "We got it badly wrong," he told the Oireachtas committee.
He said that he fully understood the depth of public anger at the banking system for failing to manage risk effectively.