Promises by top mortgage lenders to help struggling customers are useless to most people threatened with repossessions, it has been warned.

Major banks and building societies vowed not to take immediate legal action against hard-pressed homeowners - but only if they can work out a deal on repayments.

In a so-called statement of intent, the Irish Banking Federation (IBF) said it was looking to help customers who were facing genuine difficulties.

But it stressed any agreement would have to be "mutually acceptable" and would be reviewed every six months. Under the plan, those unable to meet repayments are asked to talk to their lender as soon as possible to agree some sort of arrangement that would prevent their home being repossessed.

However, a leading housing charity said the majority of people whose homes are being seized during the economic crisis have mortgages from sub-prime lenders - who have not signed up to the promise.

Aoife Walsh, spokeswoman for Respond, said laws were needed to make all financial institutions comply with industry regulations. "We see on a weekly basis that the majority of repossession cases coming before the courts relate to sub-prime lenders; in some cases the number is as high as 70%," she said. "We are calling for a statutory code of conduct to be imposed on these lenders as they are slow to show any compassion to those in difficulty."

The IBF - which represents the country's main mortgage lenders - said any deal done with its customers to stave off legal action will have to be acceptable to them and will be looked at again every six months.

"The basis for such solutions is for the customer to talk to his/her lender at the earliest opportunity so that a mutually-acceptable arrangement can be agreed, implemented and reviewed thereafter on a six-monthly basis," a spokesman said. "Provided the customer maintains this arrangement, IBF mortgage lenders will not initiate any form of legal action against them in relation to their mortgage."

The Money Advice and Budgeting Service (MABS) will have a representative on an oversight committee monitoring the process. Under the law, lenders must already wait for at least six months - or one year in the case of Bank of Ireland and AIB - from the start of arrears before applying to the court for a repossession.

They are also required to help struggling borrowers and consider options like payment deferral, an extension on the term of a mortgage, changing the type of mortgage or capitalising arrears and interest.