Residents of the Priory Hall apartment complex say they are "devastated" after their banks refused to enter a conciliation process aimed at resolving issues between all parties.
The resolution process was announced by Dublin City Council last week and had the support of residents of the site, which was evacuated last October over fire safety concerns.
However it is understood the Irish Banking Federation and banks with mortgages outstanding at Priory Hall will not take part, despite pressure from the Environment Minister Phil Hogan.
Residents' spokesperson Graham Usher said the banks' refusal has dashed their hopes for a quick resolution.
"It's a huge blow for the residents," he said.
"This was the first positive step in six months and the reality is that all of the stakeholders need to be involved to find a solution.
"It's going to be incredibliy difficult if one of the parties won't participate."