States are in the forefront of policymaking to minimize damage from the mortgage meltdown. President George W. Bush on Thursday (Dec. 6, 2007) announced a groundbreaking agreement with major lenders to temporarily freeze sub-prime interest rates that are set to rise, but California Gov. Arnold Schwarzenegger got there first: He unveiled a similar deal last month.
"(Bush's plan) essentially captures the same spirit of what we announced in Fresno a couple of weeks ago," Preston DuFauchard, the commissioner of California's Department of Corporations, said in a conference call after the president's announcement. Both plans are limited to borrowers current on their monthly payments but who will have trouble paying higher rates that kick in next year.
California is not the only state to address the crisis.
- In Michigan, the attorney general last week sent letters to 30,000 homeowners who are one to three months behind on their payments, inviting them to attend a forum Dec. 13 to meet with their lenders and discuss ways to avoid foreclosure.
- Illinois has set up Homeowner Outreach Days, during which residents can meet with lenders and attend workshops about foreclosure prevention and scams. Three such events conducted so far have drawn about 200 people each, and several more events are scheduled.
- Iowa is one of at least six states (along with Colorado, Connecticut, Indiana, Massachusetts and New Jersey) that have set up foreclosure hotlines. These enable borrowers to reach counselors who can then talk to lenders for them about loan modifications.
Their efforts come as the already bad mortgage problem is about to get worse. This year 1.5 million homes will enter foreclosure, the Mortgage Bankers Association reported Dec. 6, and more will do so next year.
Read the full report States Take Lead in Housing Crisis on Stateline.org's Web site.