As foreclosures begin to get a lot of press coverage, inevitably, what comes under scrutiny is the lending practice, criteria and even advertising methods of some of the lenders in the real estate market.

A recent news item on CNN, for example, highlighted the fact that many borrowers in trouble were pulled in by deceptive ads such as LowerMyBills.com. The ads featured dancing figures, apparently happy about low-loan rates. One ad claimed a “$145,000 mortgage for under $499 a month!” Few, if any, borrowers actually scrolled to the bottom to see payments actually double over time.

It is exactly this kind of advertising practice and the fact that very recently a top level mortgage broker publicly admitted that they were under pressure to meet tough monthly targets by practically helping self-certified borrowers fill-in mortgage application forms in a way that would make it possible for the borrower to apply for a much higher loan than would otherwise have been possible.

With practices like this it is no wonder that borrowers caught in the hard world of the sub-prime mortgage market are in trouble, nor is it any wonder that lenders are over-exposed. Lawmakers and cynics are already talking about greed being the undoing of the lenders but that, right now, is beside the point.

What is required here are two distinctly different forms of action, none of which has anything to do with the knee-jerk reaction of banning sub-prime mortgages, as some have been calling for in the news.

The first, is already been taken, President Bush and members of Congress as well as 37 State Prosecutors have began to pressure lenders to be a little less eager to foreclose on properties and actually work with struggling home owners to resolve the issue where possible.

The second, and probably the hardest to implement, is the enactment of regulation which will safeguard, in future, borrowers from exactly the kind of sharp practice they have been exposed to this time round. Whether this is a self-regulatory or a legislatively-driven kind of regulation is, at this stage, immaterial. We clearly need something in place if we are to preserve the healthy growth in home ownership figures and the fact that the existence of sub-prime mortgages gives the opportunity to borrowers who would not otherwise be able to buy a house, to benefit from the great American Dream.

The state of our economy is only bolstered from home ownership and to contemplate anything that negatively affects that is clearly a short-sighted, knee-jerk reaction which will do more harm than the foreclosure and mortgage debt problems it tries to avoid.