States Act Aggressively to Fight Foreclosures

Unwilling to wait for the federal wrangling, states make bold moves
By Kevin Spak,  Newser Staff
Posted Apr 4, 2008 11:17 AM CDT
A home in foreclosure is seen in Pasadena, Calif., Tuesday, Jan. 15, 2008.    (AP Photo/Nick Ut)
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(Newser) – State lawmakers aren’t sitting around waiting for Washington to solve the mortgage crisis, the Wall Street Journal reports. Instead, many are taking aggressive steps to ease borrower pain, sometimes running afoul of lenders in the process. Illinois, Maryland, and Minnesota all have bills in the works to impose a moratorium on foreclosures—in one state as long as 12 months— for families attempting to restructure mortgages.

“We have a crisis,” said one Minnesota lawmaker. “This seemed like the boldest way that we could respond.”  State solutions tend to focus more on foreclosures than federal proposals do because they take such a heavy toll on state budgets, which are dependent on property taxes. But lenders oppose much of the legislation. In Minnesota’s case, an industry group argues that it would “erode confidence” in “the stability of contracts.”