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Ohio Seeks to Help Those in Loan Trouble

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Ohio has been hit hard by the upheaval in the mortgage market, posting one of the highest foreclosure rates in the country. The state has a new program to help homeowners get out of high-interest mortgages and into lower, fixed-rate loans.


Ohio begins a deal today that could help some homeowners get out of high interest rate mortgages.

NPR's Jack Speer reports.

JACK SPEER: Ohio is no stranger to the problems now roiling the mortgage market. At the end of last year, the Mortgage Bankers Association rated Ohio as having the highest foreclosure rates in the country. Doug Garver is executive director of the Ohio Housing Finance Agency, which is floating a $100 million bond issue to help troubled homeowners.

Mr. DOUG GARVER (Executive Director, Ohio Housing Finance Agency): We are anticipating that the average loan size will be approximately $100,000. And what we are going to do is see how the market reacts and then if we need to issue additional phases, we will do so.

SPEER: Meaning there could be more loan programs in the future. Under the first phase of Ohio's program, borrowers will meet certain income guidelines will be able to ditch their adjustable rate mortgages or other high interest rate loans and get into a 6.75 percent fixed rate mortgage.

Jim Rokakis, the treasurer of Cuyahoga County, says the program may be a good idea but he says it comes too late to help many of the people in his county. He would like to see additional measures. What he wants in effect is for lenders to take a time out.

Mr. JIM ROKAKIS (Treasurer, Cuyahoga County, Ohio): I think declaring a period of a moratorium and foreclosures and arm resets is not a bad place to start. Some of these banks are better off having families in these properties paying what they can afford today than walking away from these properties because of a foreclosure exit.

SPEER: In Cuyahoga County, foreclosure fallings were up by more than 13,000 last year. Rokakis says officials first started seeing the rise in foreclosures six years ago and began running public service announcements like this one over a year ago.

(Soundbite of public service announcement)

Unidentified Woman: (unintelligible).

Unidentified Man: Ever get one of those big, fat checks in the mail? All you have to do is sign and your money troubles are over.

Unidentified Woman: All I have to do is sign it.

Unidentified Man: Don't. Or you could lose your home. Don't borrow trouble.

SPEER: In the past, most subprime lending and foreclosures have occurred in poor urban areas. But surveys that track foreclosure rates find that's no longer the case. Zach Schiller is with the non-partisan group Policy Matters Ohio. His group has found an increase in foreclosures even in areas of the state that are doing well.

Mr. ZACH SCHILLER (Research Director, Policy Matters Ohio): It's a pretty pervasive problem. We saw that the fastest growth last year occurred at Delaware County. Delaware County is a suburban Columbus. It's the 13th fastest growing county in the country in population over the past six years.

SPEER: Officials in Ohio will also have to deal with another difficult problem when they begin processing the applications and issuing the bonds that pay for the state's new mortgage relief program. With more than 79,000 new foreclosures in Ohio last year alone, they'll have to decide who is helped under the new program and who gets left out in the cold.

Jack Speer, NPR News, Washington.

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