Some European countries have proposed debt forgiveness measures to assist delinquent mortgage borrowers, including Portugal.

These are a potential credit negative for RMBS if the proposals cover securitized loans, according to a Standard & Poor's note released this morning.

The rating agency reported that the three main parties in Portugal's parliament proposed that struggling borrowers be able to return property and cancel mortgage debt if at least one of the borrowers is unemployed and the borrower's monthly income does not go over €830 ($1,023)-€2000. The agency cited figures from

Parliament could approve the new rules by the end of September, S&P noted.

Meanwhile, the rating agency also said that in terms of Portuguese RMBS performance, 90+ day arrears in the deals that S&P rates rose to 3.5% in 1Q12 from 2.4% a year earlier.

The increasing unemployment rate in the country can further pressure Portufirms and consumers, according to the rating agency. The unemployment rate increased  to 15% in the second quarter, which is a 14-year high, from 14.9% in the first quaret of the year, S&P reported.

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