A group of Democratic lawmakers hopes a multimillion-dollar "rescue fund" will help Pennsylvania homeowners trapped in bad mortgages straighten out their finances.

In the process, they hope to keep the state from being swept up in the wave of subprime mortgage foreclosures that has drowned borrowers in states with pricier housing markets.

Today in Philadelphia, Reps. Peter Daley of California, Washington County, and Dwight Evans and Michael McGeehan of Philadelphia are expected to introduce legislation that authorizes the creation of a $25 million fund that would essentially underwrite new mortgage assistance programs through the Pennsylvania Housing Finance Agency.

Brian Hudson, executive director of the agency, said the state's assurance of $25 million would allow the agency to sell $50 million in taxable bonds. That money would be used to help homeowners restructure their mortgages, reduce the difference between the loan amount and the home's appraised value, or pay the loans outright in favor of a new mortgage with better terms. The state money will cover the housing finance agency's losses.

The trio of state lawmakers also is expected to call for a voluntary, six-month moratorium on mortgage foreclosures.

The $25 million rescue and the foreclosure cease-fire are the capstones on a package of six other bills, proposed by Gov. Ed Rendell, that seek to tighten Pennsylvania's lending market and crack down on the handful of nonbank, subprime lenders who prey on underqualified and uneducated borrowers. The bills are to be discussed today at Independence Hall Visitors Center in Philadelphia, the third and last in a series of statewide House Commerce Committee hearings on the subject.

Some bankers and mortgage groups think the bills overreach and will drive up borrowing costs for all consumers. Extra supervision of the lending institutions won't, and can't, do anything about borrowers who fraudulently overstate their income, rack up credit debt after closing on a loan, or simply take bad risks in hopes of cashing in on rising home values.

But default rates, and concerns that some predatory lenders have pushed borrowers into making bad decisions, have pressed states into action. Virginia, Colorado, New York, Massachusetts and other states are exploring crackdowns on predatory lending and the subprime market. Legislators and governors in those states say they have been driven, in part, by inaction and a lack of regulation on the federal level.

Pennsylvania's reform package must be ratified by both the House and Senate, then approved by the governor, before it becomes law. The proposals would impose stricter licensing on individual lenders and real estate agents, as well as appraisers. Another provision would require the state to maintain a list of bankers and brokers facing discipline. The bills also would try to restrict prepayment penalties for subprime borrowers who are able to pay off their original loans early via refinancing.

Mr. Hudson said Pennsylvania actually is faring much better than other states with higher housing prices, such as California and Florida, when it comes to the total number of mortgage foreclosures. In 2003, Pennsylvania was in the top 10 in total mortgage foreclosures. Today, it's 25th or 26th, he said.

Still, foreclosures have increased fourfold in Allegheny County over the last decade, from 1,100 to nearly 5,000 annually, for a variety of reasons. Proponents of reducing property tax rates say seniors often lose their homes because they can't afford spiraling school taxes. More often, homeowners are stuck with mortgages they simply can't pay, often because their bad credit forced them into variable-rate mortgages or the subprime lending market.

A variable-rate mortgage is one that starts at one interest rate, then balloons two years or more down the road, increasing the monthly payment by hundreds of dollars in some cases. Subprime lenders arrange loans for home buyers who can't qualify for traditional bank mortgages because of poor credit scores.

Either way, default is sometimes the result.

Nationally through 2008, another 2 million adjustable-rate mortgages are scheduled to "reset," meaning new, higher interest rates will kick in. Analysts are predicting another spike in delinquency and home foreclosures next year.

"The key to all of this is education, education, education," Mr. Hudson said. It's better to turn down a loan with bad terms than be forced to deal with the consequences -- some borrowers, for example, might find that they qualify for a prime rate loan if they bothered to investigate, but because of their naivete they are "steered" toward the subprime market by aggressive solicitation.

Mike Flynn, of the Mortgage Bankers Association of Southwestern Pennsylvania, agrees that the foreclosure rate on subprime -- about one in five -- is a sad fact of the burgeoning subprime market (the foreclosure rate on prime mortgages is between 1 and 2 percent).

The flip side of that figure is the 80 percent of borrowers who are able to meet their loan payments. Big lenders such as Wells Fargo and Citiwide have utilized the subprime market to take advantage of what had been a hot housing market nationally, and the result was record home ownership levels, something President Bush touted proudly. Scaring lenders away from the subprime lending market could make it harder for middle-class borrowers to secure credit, reform skeptics say.