Feds study loan crisis

As hundreds of thousands of homeowners nationwide face potential foreclosure, a heated battle is brewing in Congress over how to address the subprime mortgage meltdown. Lisa Friedman in the Daily News.

The mortgage woes are hitting California particularly hard, with 57,875 of the nation's 243,947 foreclosures in August being filed in the Golden State, according to the Irvine-based RealtyTrac Inc.

Los Angeles County accounted for nearly 12,000 of the month's foreclosures.

But while legislation moved forward last week to allow judges to modify the terms of a home's first mortgage in a bankruptcy proceeding, it faced fierce objections from Republicans who said it would drive up interest rates.