Keeping the homeownership dream alive: with foreclosures at an all-time high, lawmakers are working to help people keep their homes.

• Author: Morton, Heather

Long touted as the American dream, homeownership is at its highest ever. But with rising interest rates and the growing number of houses in foreclosure, owning a home may be some people's worst nightmare.

Buying a home can be a confusing, complicated transaction--and cost a lot of money. If consumers don't understand the process, make poor financial choices, or are misled by unscrupulous actors, they can end up with a home and a loan that are difficult to afford.

Nearly 5 percent of all outstanding residential mortgage payments were late in the first quarter of 2007, which isn't a lot more than the first quarter of 2006, according to the Mortgage Bankers Association's National Delinquency Survey. But what has increased is the percentage of homeowners who have received a foreclosure notice. That number is the highest it's ever been since the banker's group started doing the survey in 1953.

The Center for Responsible Lending predicts that one out of five subprime mortgages originated in the past two years will end in foreclosure. But even though foreclosures are increasing in some segments of the mortgage market, they have not yet reached the crisis stage, according to the Center for Statistical Research.

EMERGENCY FUNDS AND LOANS

State lawmakers want to make sure that solutions to the issues with nontraditional mortgages, subprime loans and the rising numbers of foreclosures, don't dry up credit for consumers or harm communities and the housing market.

Some states provide special, low-cost loans to help consumers make their mortgage payments when they are in danger of losing their homes. Pennsylvania created the Homeowners' Emergency Mortgage Assistance Program (HEMAP) in the 1980s, when foreclosures were spiking. Lawmakers wanted a program that would help prevent future foreclosure emergencies. It helps homeowners who are at least 60 days delinquent on their mortgage and are suffering financial hardship due to circumstances beyond their control. As part of the program, a mortgage lender must send a notice to the consumer that the mortgage is in default and a foreclosure is imminent. The lender must tell the homeowners about HEMAP and a 30-day temporary stay is placed on the proceedings to give them an opportunity to apply for the emergency mortgage assistance.

This spring, Ohio created the Opportunity Loan Refinance Program to help homeowners in trouble with their current mortgages. The program offers 30-year, fixed-rate loans along with a 20-year, fixed-rate second mortgage to help with closing costs. According to the Ohio Housing Finance Authority, as of June, it already plans to make more than 80 loans...