04/16/2008 - As the federal government debates responses to the foreclosure crisis, states are experimenting with a broad range of solutions, including emergency loans and agreements to limit high interest rates. The result is a rapidly changing patchwork of local approaches, some far-reaching, others modest, according to a survey issued Tuesday by the Pew Charitable Trusts.
Among other measures, 20 states have created intervention programs, 13 have set up counseling hot lines, 14 have assembled task forces and 9 have established funds for emergency loans or refinance loans, totaling $450 million.
“States have had to step into the void because the federal government has not moved,” said Tobi Walker, a senior program officer at Pew. “The nature of the problem changes quickly; that’s why it’s important to look to states, which can be far more innovative. They can adapt solutions to local circumstances.”
It is too soon to say how effective any of the programs will be.
The states face an uphill battle, in part because of resistance from the lending industry to new regulation. Only nine states require mortgage brokers to consider the best interests of borrowers when making loans, and only seven require lenders to assess borrowers’ ability to repay. At the same time, state governments are hamstrung by declining revenues as a result of the housing meltdown.
Read the full article Foreclosures Push States to Try a Mix of Solutions on the New York Times' Web site.
Read the related press release on Pew's site 1 in 33 Homeowners Projected To Be In Foreclosure Within The Next Two Years.
Pew is no longer active in this line of work, but for more information visit the Subprime Mortgages Project on PewHealth.org.