Ohio governor calls on lenders to help cut foreclosures
Wednesday, October 10, 2007 at 11:51 a.m.
Read more: Local, State
COLUMBUS, OH (AP) -- Mortgage lenders in Ohio, which has one of the nation's highest foreclosure rates, must try harder to restructure loan agreements with delinquent homeowners under a plan proposed Tuesday by Gov. Ted Strickland.
Strickland called on lenders who offer subprime mortgages - loans offered to borrowers with weak credit histories - to be as flexible as possible in modifying loan arrangements and avoid more home foreclosures.
Borrowers in subprime adjustable rate mortgages should be given six months notice before their interest rates are reset to higher payments, according to the proposal.
Up to 200,000 subprime adjustable rate home loans valued at $14 billion are scheduled to reset at higher rates through 2008, and the state anticipates that many Ohioans won't be able to afford the higher monthly mortgage payments, Strickland said in a statement.
Under a proposed compact with the state, lenders would be required to submit a monthly report to the Department of Commerce documenting progress on restructured loans and any foreclosures.
The compact would remain in effect until a 12-month average of foreclosure filings in Ohio declines for four consecutive months or until Dec. 31, 2010, whichever comes first. A message seeking comment was left Tuesday for the Ohio Bankers League.
If lenders don't agree to the plan, new legislation putting the compact into law would be an option, said Keith Dailey, a spokesman for the governor.
Strickland, a Democrat, said he wants lenders to respond to the proposal by Oct. 22.
Ohio has had more home foreclosures than any state except Florida and California.
Ohio had 44,594 foreclosed homes in the first six months of 2007 and the state's foreclosure rate has been higher than the national average for every quarter since the end of 1998.
Strickland's plan grew out of recommendations released last month by the Ohio Foreclosure Prevention Task Force, a panel that studied that state's foreclosure woes.
(Copyright ©2007 by The Associated Press. All Rights Reserved.)
