The new scheme will see the bank contacting all other lenders who are owed loans by the homeowner, and trying to get these unsecured debts reduced.
The Irish Banking Federation has agreed the new measure. AIB, Bank of Ireland, Ulster Bank, KBC Bank and Permanent TSB are understood to have backed the new policy.
One bank said that it is prepared to write off up to 80pc of the 'unsecured debt' it has advanced to borrowers who are in distress.
"This new initiative will involve lenders and customers working together both to prioritise the home-loan payment, and to restructure the customers' remaining debts on an appropriate basis," the banking body said.
The deal will be in place for three years and then reviewed.
If the homeowner sticks to the agreement for five years, they could have up to 80pc of their unsecured debts written off.
The aim of the new deal was to encourage financially distressed people to work with their mortgage lender, with the aim of keeping families in their homes.