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As US foreclosures mount, states step in

New laws aim to prevent fraud, and states are creating task forces and designating funds to deal with the issue.

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Soaring foreclosure rates are sending states scrambling.

Their goal: to protect homeowners from a new crop of scam artists who claim they will "rescue" borrowers. At the same time, some states are forming funds that could provide affordable fixed-rate mortgages to those on the precipice of losing their homes.

The stakes are high: As many as 130,000 homeowners – the most in 30 years – are going into foreclosure each month. Experts worry that entire neighborhoods will decline – similar to what happened in the 1960s and '70s – as abandoned foreclosed homes cause property values to drop. Some elected officials are calling for federal legislation to prevent predatory lending and asking lenders to voluntarily hold off on raising mortgage rates for those most in trouble.

Here are some of the ways states are trying to help:

• Ohio, which has one of the highest foreclosure rates in the country, started taking applications this week to give fixed-rate loans to homeowners with subprime, adjustable-rate mortgages who've seen their monthly payments skyrocket beyond their means.

• Colorado is considering a law that would make it a criminal offense for appraisers to falsely inflate the value of homes in mortgage proceedings.

• Legislation is also under consideration in Indiana that would create free consumer counseling for those facing mortgage problems.

• At least four states have set up task forces to study foreclosures and recommend solutions.

• At least a dozen states have enacted laws designed to crack down on fraud by so-called "foreclosure consultants" who claim to help homeowners in trouble.

"States are rapidly reacting to foreclosures," says Heather Martin, an analyst at the National Conference of State Legislatures in Denver. "Some states are passing new laws. Some are creating studies. Some are trying to find out what their options are."

Ohio's problems and potential fixes

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