In a bold move by the Irish government, Irish banks will be told to forgive substantial amounts of mortgage payments by borrowers.

The new law will lower monthly payments for tens of thousands of Irish mortgage holders.

“For the banks, where there are losses, they have to be recognized,” Alan Shatter, Ireland’s justice minister, who has sponsored the new law, called the Personal Insolvency Bill. 

He told The New York Times: “This legislation gives homeowners hope for their future.”

The Irish foreclosure rate is very high but unlike in the U.S, there have been very few evictions which are seen as socially unacceptable and have proven very unpopular.

The new laws seek to end the continuing stalemate by creating new consumer debt and bankruptcy law.

The Irish attempt to reset mortgage payment debt will be watched closely elsewhere in other European countries with similar problems.

Read more news on Ireland's economy here