States are beginning to enact protections for subprime borrowers, reacting to the absence of a national solution from Washington. North Carolina last week became one of one of several states to clamp down on the adjustable-rate mortgages that have fueled the subprime meltdown.

From the New York Times:

Lawmakers in a handful of states — including Maine, Minnesota and Ohio — have passed measures to tighten restrictions on subprime lending. Illinois, New York and Massachusetts have formed task forces and held meetings involving members of the mortgage industry, lenders and consumer representatives to figure out ways to rework problem loans. Minnesota is acquiring some foreclosed properties to resell to low-income people.

Several states are considering laws and regulations to make mortgage brokers accountable for allowing borrowers to take on debts they cannot repay.

In all, legislators in more than 30 states have introduced close to 100 bills intended to stem deceptive-lending practices and foreclosure, some by stiffening criminal penalties.

It is doubtful that any legislative solution from any level of government can help people currently caught up in the subprime meltdown, though several states are trying. Massachusetts is working with Fannie Mae to pony up $250 million to refinance the loans of about 1,000 homeowners, while a similar $100 million program from New York will help 500 homeowners.

A national solution is required to combat predatory lending. The housing market, long considered local, and immune from national declines, is about to suffer the first national slide; fifty state solutions cannot guarantee the uniformity of protection afforded only by an act of Congress.

States Begin Action on Subprime Lending [NYT]
(AP Photo/Paul Sakuma)

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