A week after announcing free legal aid for financially struggling homeowners, Ohio Gov. Ted Strickland this week announced that nine mortgage lenders have agreed to sign a contract that includes six measures that officials said would help bring down the state’s rising foreclosure rate.

Ohio faces a deficit of between $750 million and $1.9 billion, largely due to weaker-than-expected tax collections related in part to the ailing housing market.

The state also led the nation in the percentage of foreclosures last year with 3.8% of all loans in foreclosure, while an additional 7.7% of loans were more than 30 days late at the end of 2007.

As part of their agreement with the governor, the lenders agreed to consider modifying adjustable-rate mortgages and subprime mortgages, as well as attempting to contact all at-risk borrowers, and creating incentives for its staff to modify loans rather than foreclose.

The lenders also agreed to report their progress to the state and enter into the non-binding agreement through June 30, 2009.

“These steps will reduce foreclosures in Ohio and bring stability to the families and communities affected by this crisis,” Strickland said in a statement released after Monday’s announcement.

The lenders are Citi, HSBC Finance Corp., Select Portfolio Servicing, Carrington Mortgage Services, Ocwen Financial Corp., Option One Mortgage, Saxon Mortgage Services, GMAC RESCAP/Homecomings Financial, and Litton Loan Servicing.

State officials decided to meet with individual lenders after earlier talks with the mortgage lenders’ trade association last November ended with no agreement.

Earlier this month Strickland announced that more than 1,100 private attorneys would volunteer this time to work with homeowners who earn under $55,000 annually and are struggling to make their mortgage payments.

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