SACRAMENTO: Gov. Arnold Schwarzenegger has announced that he will sign two bills to increase homeowner protections -- but neither will solve the current subprime loans crisis.Schwarzenegger characterized the two measures as steps toward increasing "transparency and accountability in the lending market that will help homeowners preserve their American dream."But Senate Bills 223 and 385 target policies and procedures for future borrowing, not the subprime loans currently held by many Californians struggling to survive rising costs.With mortgage foreclosures soaring, Gov. Arnold Schwarze- negger has announced that he will sign two bills to increase homeowner protections -- but neither will solve the current crisis.

These are really minimalist kinds of steps for making changes in the subprime mortgage market," said Paul Leonard of the Center for Responsible Lending, a nonpartisan public policy group.The lending crisis stems from a housing boom fueled by excessively loose lending standards, interest-only loans and other exotic products that are stressing borrowers as adjustable rates rise.Sen. Mike Machado, a Linden Democrat who chairs the Senate's Banking, Finance and Insurance Committee, proposed both of the lending-related bills cited by Schwarzenegger:

• SB 223 would prohibit licensed appraisers from being unduly influenced by someone with an interest in a real estate transaction or from being paid based on the value of property they evaluate.

• SB 385 would make state-regulated mortgage lenders and brokers subject to federal guidelines on nontraditional mortgages, including notifying consumers of all risks in a clear, balanced and timely manner.Machado's two bills received nonpartisan support.

"It is critical that we take steps to protect Californians against unscrupulous lending practices and to ensure that consumers can make informed decisions," Schwarzenegger said in a written statement.SB 223 was passed by the Legislature as an urgency measure, meaning it will take effect immediately upon signing by Schwarzenegger.With massive sums of money invested and powerful interests involved, state officials have struggled to reach consensus on the extent of intervention needed to ease the subprime crisis.SB 223 and SB 385 represent two of the least controversial options.

Machado said they are significant for curing defects in lending practices and protecting future borrowers. But Machado said that if lending institutions prove unwilling to rework subprime loans held by struggling homeowners, he will not hesitate to push stronger measures next year."We have noticed that there have been very few who have stepped up," Machado said.

"The fact that people have given lip service to it is giving me cause to come back and say, 'OK, what do we have to do to make this more forceful?"Sen. George Runner, R-Lancaster, applauded SB 223 and SB 385 but said the state should reject any heavier-handed approach. "You've got extremists out there who want people to get bailed out of their bad loans," he said."Some of those people are investors who knew perfectly what they were getting into.

"Leonard, of the Center for Responsible Lending, said the bill targeting undue influence of appraisers, SB 223, does not go far enough because it applies only to coercion, extortion or bribery.The measure does not address more subtle types of influence, such as when a lender implies that a certain appraisal price is needed to make a transaction work or could increase the likelihood of future jobs for the appraiser, Leonard said.

"We did support these bills, but we sought far stronger action," Leonard said.To fight the subprime crisis, the Center for Responsible Lending has suggested measures ranging from facilitating loan modifications to mandating escrow accounts for subprime borrowers.