WATERLOO -- Cedar Valley housing agencies and lenders are bracing for a ripple effect from the ongoing national foreclosure crises.

Abusive lending and risky mortgages that sparked foreclosures across the U.S. will hit the Cedar Valley area too, said Lekeisha Veasley, the lead housing and foreclosure prevention counselor for Operation Threshold.

The group hosted a foreclosure and predatory loan prevention forum Wednesday to help prepare lenders, real estate agents and government officials for the potential spike in foreclosures.

"It's going to come," Veasley said. "We've been fortunate not to see it happen, but we need to have a plan in place."

A panel of lenders and real estate agents answered questions from the nearly two-dozen people, including Rep. Bob Kressig, D-Cedar Falls, who attended the forum at Allen College. KWWL anchor Ron Steele hosted the event. Members of the panel encouraged people who are having problems meeting mortgage payments to stay in touch with their lenders.

"If you're in trouble, we see you're in trouble," Tonya McLaughlin of Iowa Community Credit Union, said. "We'll bend over backwards to keep from foreclosing."

Lenders lose money on foreclosures, especially during the sluggish housing market, McLaughlin added.

Many Iowa borrowers got home loans in the subprime market, Veasley said. Subprime loans allow buyers who may have a poor credit or low income to borrow money to buy real estate.

Many of those loans were issued with an adjustable rate mortgage.

Those subprime loans and ARMs allowed people with lower incomes or poor credit to buy homes -- as long as the mortgage rate stayed low.

Once the housing market took a downturn, mortgage rates went up, property values stagnated and borrowers were unable to keep up with the sudden rise in their mortgage payments.

According to the U.S. foreclosure market report, the number of properties in the U.S. with foreclosure activity has gone from 239,770 in the first quarter of 2007 to 739,714 through the second quarter of this year.

According to the Center for Responsible Lending, 263 foreclosures were on subprime loans.

Up to 80 percent of subprime loans were issued with an ARM, Veasley said. Many had a three-year fixed rate, which ends this year or next. Once the fixed-rate adjusts to current mortgage rates, those borrowers may not be able to keep up their payments.

Foreclosures impact the entire community, Veasley said. They cause a rise in demand for rental properties.

A foreclosed property causes an average 0.9 percent decrease in property values in a one-eighth-mile radius, she said.

They also can lead to increased predatory lending, said Lana Ross, executive director of the Iowa Community Action Association.

Predatory lenders promise instant money but charge exorbitant interest rates and fees.

Payday loans and instant tax refund businesses charge fees that would equal a 70 percent annual percentage rate loan, Veasley said.

Beth Huffman of Four Seasons Realtors encouraged people to do research before taking out a major loan.

"Just because a lender tells you that you can afford a $200,000 home doesn't mean you should buy it," she said. "It's all about the education. The education resources are there," Huffman said, pointing to Operation Threshold, which offers free counseling to qualifying homeowners and home buyers.

Robin Means, of Waterloo, who attended the forum said the burden to protect borrowers should be on lawmakers.

"Abusive lending happens only because it's allowed to happen," she said. "We need to change these laws."

Contact John Molseed at 291-1418 or john.molseed@wcfcourier.com.