NEW YORK (Reuters) - A number of U.S. states are setting up funds to help homeowners with risky subprime mortgages refinance to more affordable loans in a bid to slow the rate of home foreclosures, The Wall Street Journal reported on its Web site.
The states -- which include Maryland, Massachusetts, New Jersey, New York, Ohio and Pennsylvania -- are expected to invest a total of more than $500 million in the effort, the newspaper said.

State officials hope this will be enough to keep some vulnerable low and moderate income neighborhoods from sliding into decline.

The Journal said some of the programs will be similar to existing government-lending programs, in which the state extends mortgages to homeowners and then sells those home loans, in some cases to companies such as mortgage and finance giants Fannie Mae and Freddie Mac .

The state then recycles the proceeds from the sales to make additional loans, the newspaper said.

-------------------------------------------------------------------------------------

Copyright © 2005 Reuters Limited. All rights reserved.