September 26, 2007 (LPAC)--Lyndon LaRouche's principles of a Homeowners and Bank Protection Act propose that while all foreclosures are frozen, a Federal agency freeze the mortgages and assume responsibility for protecting state and Federally chartered banks from the mortgage collapse which has triggered financial chaos. Ohio's National City Bank is an exemplary case.

Various Columbus, Ohio business publications report that National City--a state-chartered bank with 60 branches--has been hit extraordinarily hard by mortgage losses, and has had to announce large layoffs in the center of Ohio. "National City gloomy on third-quarter mortgage loss," reads the Columbus Business First headline.

Here are National City's impaired mortgage assets as of August, totaling nearly three-quarters of a billion dollars: $280 million in mortgage loans which have been foreclosed, 58% more than in August 2006; $236 million in mortgage loans on which no payments are being made, up 56% from a year earlier; and $210 million in mortgage loans which are "performing" but at least 90 days in arrears--usually meaning well into the foreclosure process. The Bank raised the total loss it expected to report in the third quarter, from $130 million to close to $160 million for the third quarter, and announced it's laying off 1,300, more than 10% of its employees. In 2006, First National had had a $2.3 billion profit.

National City had owned First Franklin Financial Corp., a mainly subprime mortgage lender, now partly closed and partly sold off; but it has responsibility for that division's bad mortgage loans.

Ohio's state attempt to refinance delinquent loans and prevent foreclosures, a $100 million bond issue announced in May by the Ohio Housing Finance Agency, was an acknowledged failure, helping only 103 households in a state where 44,000 homes have entered foreclosure proceedings in 2007. The foreclosure wave has to be stopped by Congressional action, nationwide, one of LaRouche's proposed principles.