High-interest nontraditional mortgages have proved a blessing for lower-income residents of Georgetown and Horry counties who can't qualify for traditional mortgages. Such loans are a path toward homeownership for folks who have few other housing options.

But over the years, many of these good people have fallen prey to unscrupulous mortgage brokers who sell them homes, take their money and leave them nothing to show for it. The law did nothing to prevent this.

That changed with the new year, when the S.C. High Cost and Consumer Home Loan Act took effect. This law, a good one, should put an end to this predatory lending racket, under which mortgage brokers saddle home buyers with high-cost loans whose terms they can't possibly satisfy.

The act extends consumer protections to low-income S.C. residents who want to buy homes but can't qualify financially for traditional mortgages. Equally important, it won't drive legitimate subprime lenders out of the market.

This market is a world of which middle-class folks with traditional mortgages may be unaware. It's a place where high-risk borrowers can get nontraditional loans to buy homes by paying higher interest rates. But often, lenders and mortgage brokers who arrange such loans see their borrowers as suckers, not legitimate clients.

The result: Low-income home buyers sign contracts that carry ridiculously high interest rates, tacked-on monthly charges for insurance they don't need, high points for refinancing at lower interest rates, outrageous penalties for prepayments of mortgages and balloon payments that extend the life of a loan. Unable to meet obligations they didn't understand, many subprime home buyers default, losing their homes and their investments.

S.C. legislators for years have heard predatory-lending horror stories, often in connection with mobile-home sales, but were slow to act. The fear was that state overregulation could kill off the subprime lending market entirely.

The new law, the result of years of careful crafting, leaves subprime lenders a path to profitability while reducing chances that borrowers will be fleeced. Its most important provision requires high-interest borrowers to attend free counseling sessions, to make certain they understand what they're about to get into. State regulators would screen and approve all counselors.

The law also prohibits end-of-loan balloon payments, bans all insurance requirements except credit insurance, bans the charging of points or fees if homeowners refinance their loans with the same lender, forbids prepayment penalties and requires lenders to disclose the terms of a loan 48 hours before closing. These and other provisions encourage consumer education and take the profit out of predatory lending while leaving legitimate subprime lenders incentive to remain in the market.

Why allow the subprime home-lending market to exist at all? Here and across South Carolina, many, many hardworking residents earn low incomes and have imperfect credit. If these good people can take the same money they'd spend on rent and buy a mobile home or low-cost stick-built house, even with a high interest rate, it makes sense for them to do so.

Legislators deserve credit for recognizing that poor folks are a legitimate part of the S.C. home-buying market and for making sure they're treated as customers, not suckers. The result, over time, should be an increase in homeownership and more stable S.C. communities.