Aid for homeowners urged - Lawmakers, lenders and consumer groups want the state's mortgage industry to boost efforts to avoid foreclosures.

sacramento -- Lawmakers and lenders called on the state's troubled home mortgage industry Tuesday to step up efforts to help financially strapped Californians avoid losing their homes to foreclosure.

But they stopped well short of endorsing calls from consumer groups for a moratorium on foreclosures -- now at a 20-year high.

"Legislative efforts to intervene in the market are not the answer," said state Sen. Michael Machado (D-Linden), chairman of the Senate Banking, Finance and Insurance Committee. "They can cause befuddlement at best."

Machado's committee heard testimony from more than a dozen economists, lenders, consumer advocates and regulators about how California government should deal with a mortgage meltdown.

The crisis has led to a credit squeeze that already has forced thousands of people out of their homes and threatens to do the same for thousands of others.

One of the boldest ideas came from the policy director of the Berkeley-based Greenlining Institute, which urges companies to provide financial services to inner-city communities.

Bob Gnaizda proposed that the mortgage industry create a $10-billion fund to help people restructure their high-interest-rate loans into more manageable mortgages.

California ACORN, an Oakland group that works on economic justice issues for low- and middle-income communities, demanded even stronger action -- an immediate freeze of foreclosures by banks and other lenders for as long as a year and passage of a state law prohibiting sheriffs from auctioning foreclosed property for at least six months.

"California is on the verge of a crisis in homeownership due in great part to predatory lending," said ACORN's John Cranshaw at a morning news conference.

Entry-level mortgages with interest rates that start low and rise quickly were "designed to trap borrowers into high-cost loans they cannot afford," he said.

Dorothy Hicks, an Oakland retiree who is fighting off a foreclosure, said she was struggling to meet a new monthly payment on a refinanced mortgage that jumped to $2,700 a month.

"My credit is now in the toilet because I've had trouble meeting the payments," she said. "Unless I can figure out a way to get out of this mess, I'm going to lose a home I've lived in for almost 40 years."

This is the third hearing this year led by Machado's committee, aimed at figuring out what the state can do to keep people in their homes and to protect economically crucial jobs in the construction and real estate industries.