New York legislators are considering responses to the surge in subprime mortgage defaults, including stiffer penalties on brokers who fraudulently complete borrowers' applications and a six-month moratorium on foreclosures.

Sen. Jeffrey D. Klein, a Bronx Democrat, said there could be 28,000 foreclosures in the state this year just from loans originated in 2005. That forecast, which assumes 21% of subprime loans are foreclosed, is based on research by the Center for Responsible Lending in Durham, N.C.

"Loans that homebuyers took a few years ago are now being reset with higher rates, 9.9% and 10%, and people who can't afford the payments are losing their home," Sen. Klein said.

Democratic and Republican lawmakers said they are looking at possible ways to deal with the effects of subprime mortgage defaults.

Legislative hearings are planned, and Gov. Eliot Spitzer's administration is considering ways to help affected homeowners find refinancing, Sen. Klein said.

The markets with the most subprime borrowers vulnerable to foreclosure are Nassau and Suffolk counties on Long Island, New York City, and White Plains in Westchester County, according to the senator and lawyer, who commissioned research on the topic from the center.

Many subprime borrowers are victims of fraud by mortgage brokers who filled out applications with exaggerated incomes so the homebuyer would be eligible, Sen. Klein said in an interview; other borrowers were not informed well enough about the loan to evaluate whether they could afford it.

"I see potential for class-action lawsuits here," he said.

"I'm looking into it" on a pro bono basis.

Sen. Klein said he was mindful that new rules could make it harder for low-income buyers to borrow without a strong credit history.

Without shutting off access to credit entirely, "we have to stop the practice of determining eligibility for a subprime loan without evaluating the borrowers' credit," he said. "If people get turned down for a loan from regular lenders, maybe there is a reason why."

A bill he introduced last week would require subprime lenders to verify borrowers' income. Violators could forfeit their rights to collect payments.

Other possible legislation could allow the New York Mortgage Agency to create a refinancing program for subprime loans without exposing itself to too much loss, Sen. Klein said.

Gov. Spitzer's staff is considering an expanded role for the state mortgage agency, the senator said.

The state also could provide more funds to groups who help educate potential homebuyers, he said.

Mark Hansen, a spokesman for Senate Majority Leader Joseph Bruno, said Senate Republicans "are looking at stronger penalties on brokers who fraudulently complete loan applications."

Sen. Klein said Democratic members of the Senate Banking Committee will hold hearings on subprime lending around the state to assess the problems and consider remedies.

Other measures, such as limiting loans whose interest rates start low and then increase, may require federal legislation, he said.

The New York Assembly is scheduling a series of public hearings on subprime lending to start May 29 in Albany.

"We want to determine the nature of the problem and then look at what we can do to reduce the distress on New York homeowners," said Sisa Moyo, a spokeswoman for Assembly Speaker Sheldon Silver.

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