Irish Parliament Approves Principal Reduction Law

Irish Parliament Approves Principal Reduction Law Ireland's Parliament has responded to the nation's housing crisis with a new law that enables homeowners to reduce the amounts they owe on their mortgages.

The New York Times reports that the new law will enable distressed homeowners to work with their lender on writing down the value of their mortgages. Approximately 18% of mortgages on Irish first homes were in default at the end of the third quarter, according to data compiled by the Central Bank of Ireland, and the country now has roughly $150 billion of mortgage debt on first homes.

While the Irish government acknowledges that its new law represents ‘a concept unique in international insolvency law,’ it is confident that this will help contribute to a stabilization of the housing market. Ireland's Department of Justice and Equality, in a press statement, applauded the law as ‘a fundamental part of the government's strategy to return this country to stability and economic growth.’


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