The mortgage loan modification scheme launched on Dec. 18 by the Italian Banking Association (ABI) could have a negative impact on Italian RMBS ratings if issuers implement it without correcting for potential distortions which could affect standard RMBS structural features, said Fitch Ratings.

The scheme consists of a 12-month mortgage loan payment holiday, either on principal payments only or principal and interest payments, for financially distressed borrowers that satisfy certain eligibility criteria. If a mortgage loan is in arrears at the start of the payment holiday, the arrears period is counted as part of the 12-month payment holiday.

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