toledoblade.com --

GOV. Ted Strickland clearly had to appear to be doing something in the face of Ohio’s mounting home-foreclosure problem. But the 27 recommendations offered by a gubernatorial task force are tepid at best.

The panel’s 25 members suggested some mainly “feel-good” efforts, including creating an awareness campaign to urge borrowers to get help at the first signs of trouble. They also suggested expanding debt counseling and intervention services using $10 million in public and private money.

It is clear, however, that the governor was unwilling to take on a major source of the foreclosure problem — subprime lenders — with sterner measures.

When the task force concluded that lenders should be pressured to rewrite existing loans with upwardly adjustable interest rates, the response from the financial services industry was emphatic. The Ohio Bankers League refused to support the report. The task-force member from the federal government’s Fannie Mae housing-finance abstained, and a representative from the Houston-based Litton Loan Servicing LP didn’t bother to show up.

Part of the foreclosure problem is due to the lingering effects of a lagging economy that continues to keep people out of work in Ohio. Since the end of 1998, the state’s foreclosure rate has outpaced the national average in every single quarter. In the first six months of this year, 44,594 homes were foreclosed, putting Ohio third in the nation for that dubious distinction, behind only the much larger states of California and Florida.

While some of the blame certainly rests with borrowers who wanted more expensive homes than they could really afford, the lion’s share belongs with lenders who handed out big adjustable-rate mortgages to people who had only marginal prospects of making the payments.

These so-called subprime loans carry initially low rates to entice borrowers. When adjustable rates inevitably increase over time, monthly payments go, quite literally, through the roof. Increasingly often, the result is foreclosure.

In concrete terms, there is not a whole lot that state and local governments can do to ease the foreclosure problem but jawbone recalcitrant lenders into restructuring loans — “taking a haircut” in industry parlance.

Unfortunately, the bland recommendations from the task force inidicate that Governor Strickland is unwilling to ratchet up pressure significantly on the politically powerful financial services industry.

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