NEW YORK, NY September 01, 2008 —A new law takes effect in New York today that aims to prevent another home loans crisis.

Lots of states have passed measures in response to the subprime crisis. But only New York's law has prompted Fannie Mae and Freddie Mac to retaliate.

The government-sponsored lenders say they won't buy any new subprime loans in New York, starting today. They object to a provision that would give some legal liability to secondary mortgage banks that buy loans from predatory lenders.

Sarah Ludwig is with the Neighborhood Economic Development Advocacy Project, which helped draft the new law.

LUDWIG: Here we have a filter through our law that requires affordable loans and cleans up the industry, so by saying they're not going to buy these loans, they don't want to be accountable for anything that they purchase.

REPORTER: Ludwig says Fannie and Freddie's decision to pull out of New York won't have much immediate effect since the subprime market has dried up anyway.

The law's authors say they won't consider making any changes.

Fannie and Freddie declined comment for this story.

For WNYC, I'm Ilya Marritz.