New Irish personal insolvency legislation that was proposed in January and expected to become effective in 2013 will introduce debt forgiveness for borrowers viewed as having unsustainable mortgage debt, Moody's Investors Service said in a report released today.

The rating agency sees the proposal as credit negative for Irish RMBS since many mortgage loans will be written down and many borrowers will become discouraged from maintaining their mortgage loan repayments. The rating agency projected that a quarter of all Irish mortgage debt is vulnerable to a write-down under the proposal.

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