25% of mortgages at risk of writedown: Moody’s

Moody’s Investors Service says that Ireland’s proposed personal insolvency laws, which will introduce a measure of debt forgiveness for “unsustainable” home loans, is credit negative for Irish residential mortgage backed securities.

“A quarter of all Irish mortgage debt is susceptible to a writedown under the proposal,” Moody’s said in a statement yesterday.

“The proposal is ‘credit negative’ because many mortgage loans will be written down and many borrowers will become discouraged from maintaining their mortgage repayments,” the company said.