Schwarzenegger foreclosure agenda turns to borrowers

SAN FRANCISCO (Reuters) - A week after unveiling a deal with four mortgage lenders to have them ease loan terms for distressed borrowers, California Gov. Arnold Schwarzenegger said on Thursday the state would launch an effort to help borrowers take simple steps to avoid foreclosures.

The $1.2 million campaign in partnership with community groups and nonprofit housing counselors comes as California suffers steep jumps in foreclosure rates in some of its housing markets, threatening to roil the finances of local governments there and slow the economy of the most populous U.S. state.

Schwarzenegger, at a press conference in Riverside County, whose housing market has one of the highest foreclosure rates in the nation, said the effort aims to prevent more than 100,000 California families from losing their homes.

The effort will be aimed at educating borrowers whose mortgages have or will become too expensive after low initial interest rates reset at higher levels, telling them how to contact their lenders and on the perils of avoiding them.

"It's a two-way street that got us into this mess," Schwarzenegger said at the press conference, aired on his Web site, adding it is imperative for borrowers and lenders to work together to strike deals to prevent foreclosures.

Schwarzenegger also said he would press more lenders to join the four -- Countrywide Financial Corp <CFC.N>, GMAC <GMA.N>, Litton Loan Servicing LP and HomeEq Servicing Corp -- who signed on last week to a loan modification program negotiated by his office and based on a proposal by Federal Deposit Insurance Corp. Chair Sheila Bair.

The four lenders agreed to allow many potentially distressed borrowers in California to keep low rates on their home loans.

(Reporting by Jim Christie, Editing by Chizu Nomiyama)