Subprime monitoring program to start

WASHINGTON (Dow Jones/AP) -- The Federal Reserve and other regulators are launching a new pilot project to keep a better eye on the mortgage practices of non-depository subprime mortgage firms.

The new project, set to begin in the fourth quarter, and will focus on roughly a dozen non-depository subsidiaries of bank and thrift holding companies, as well as mortgage brokers doing business with, or working for, those entities.

Critics claim such companies have slipped through the cracks of state and federal oversight, and helped fuel the rapid expansion of the subprime mortgage market during the recent housing boom.

The resetting of many adjustable-rate mortgages into higher rates over the last year have pushed record numbers of homeowners into the foreclosure process.

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