Ohio Plans Bonds to Bail Out Homeowners Strapped by Mortgages By Martin Z. Braun March 23 (Bloomberg) -- Ohio, which had the highest foreclosure rate among the 50 U.S. states at the end of 2006, plans to issue $100 million in taxable municipal bonds next month to help homeowners refinance mortgages they can't afford. Proceeds of the bond issue by the Ohio Housing Finance Agency will provide financing for about 1,000 loans with a fixed rate of about 6.75 percent, said Robert Connell, the agency's director of debt management. ``We believe that it is incumbent on this agency to do something to assist these folks to enable them to keep their homes,'' Connell said. ``A $100 million bond from this agency is not going to solve Ohio's foreclosure problem. We hope to at least make a dent.'' A March 13 survey by the Mortgage Bankers Association found that Ohio had highest rate of homes in foreclosure nationwide. The state, whose economy has suffered amid declines in manufacturing, also had the highest rate of subprime loans in foreclosure. Subprime mortgages are granted to people with poor credit histories or high debts and often have rates at least 2 or 3 percentage points above safer prime loans. Earlier this month, Ohio Governor Ted Strickland, a Democrat, formed a task force to stem home foreclosures in Ohio. The group will develop strategies to assist homeowners facing foreclosure and educate homebuyers. April Rollout Ohio will begin rolling out the refinancing program on April 2, Connell said. The loans will be limited to homeowners whose income is up to 125 percent of the median income of their county. ``It will be available to the residents of Ohio to take them out of their adjustable-rate mortgages, their interest-only mortgages and avail them the opportunity to move into a fixed rate mortgage which may now benefit their individual financial situation,'' Connell said. Kansas City, Missouri-based George K. Baum & Co. will manage the bond sale for Ohio's finance agency. The bonds will taxable because the U.S. tax code prohibits states and local governments from using proceeds of tax-exempt bonds to refinance existing mortgages, Connell said. The survey by the Mortgage Bankers Association found that Ohio's foreclosure rate across all loan types was 3.38 percent. Indiana was second among U.S. states with 2.97 percent and Michigan was 2.39 percent. Ohio also led the nation will 11.32 percent of subprime loans in foreclosure. Also today, lawmakers in California and New Jersey said they plan to hold special hearings on subprime home lending and how it may affect residents in their states. Massachusetts officials earlier this month subpoenaed UBS AG and Bear Stearns Cos. as part of an investigation into why the companies wrote upbeat reports on subprime mortgage lenders as bad loans rose to a four-year high. To contact the reporter on this story: Martin Z. Braun in New York at firstname.lastname@example.org .