As the nation continues to face a home loan foreclosure crisis, state officials are trying to come up with ways to improve Mainers’ knowledge of personal finance.

“Financial illiteracy is at the heart of the current sub-prime lending crisis our country is now experiencing,” Rep. Marilyn Canavan, D-Waterville, said Friday. “It’s critical to the future economic well-being of our state and our nation that our children understand the basics of money management: how to use credit wisely, how to plan for the future, and how to avoid unmanageable debt.”

The July U.S. Foreclosure Market Report showed a total of 179,599 foreclosure filings reported nationwide during the month, up 9 percent from the previous month and up 93 percent from July 2006.

Foreclosures have been concentrated among borrowers with shaky credit who took out larger loans than they could afford. Some borrowers did so knowingly, but others were the victims of misrepresentation or fraud whereby nonbank lenders encouraged loan applicants to inflate property appraisal values or exaggerate income, according to William Lund, director of the Maine Office of Consumer Credit Regulation.

As a result, millions of people nationwide cannot afford the fees and adjustable interest rates that have come with their loans.

“The overall message is consumers can’t count on lenders to set limits for them anymore,” Lund said. “With loan brokers receiving commissions for closing, no longer can a consumer trust that they’re only being loaned as much money as they can easily repay.”

Canavan sponsored a bill to appropriate $50,000 in matching grants for start-up financial education programs. The bill passed last session and will go into effect in September.

A second law that will also go into effect this fall appropriates $15,000 to fund a statewide seminar for K-12 teachers to learn to teach personal finance to their students. Deputy State Treasurer Barbara Raths said her office expects the subject is best suited for social studies classrooms.

The Legislature included in its recently passed “Act To Protect Maine Homeowners from Predatory Lending” a clause to require borrowers of high-rate, high-fee mortgages to receive counseling on their transaction. Counseling must take place with a third-party, nonprofit organization approved by the U.S. Department of Housing and Urban Development, a Maine housing financing agency or the regulatory agency that has jurisdiction over the creditor. That law goes into effect in January.

A Maine public organization called hoMEworks offers 10-hour home-buyer education courses throughout the state.