California regulators are urging banks to keep their home equity lending options out of their marketplace.

The California Department of Financial Institutions (DFI) said Tuesday it will hold banks accountable if they fail to follow the guidance from the state’s home equity lenders, which has been called a national model.

The agency is asking banks to maintain certain minimum standards of performance in their home loan portfolios.

The directive comes as banks struggle to keep pace with rising home prices and rising demand from new residents.

The DFI, which oversees more than 30,000 mortgage lenders, said it’s already seen a jump in originations from investors since California started offering its Home Equity Lending Program.

It also said it expects to see more of the program’s loan originations go to borrowers who can afford it, and it said it will increase its oversight to ensure that the program is working for borrowers.

The DFI’s guidance is the latest step in the fight against mortgage lending abuses that have plagued the nation since the 2008 financial crisis.

The program allows borrowers to refinance loans with up to $200,000 in equity in their homes if they can prove they can’t pay their mortgage.

The program is aimed at easing the strain on banks and homeowners in states that were hit hard by the recession, which caused more than $2 trillion in damage.

It’s been hailed as a model for a more competitive marketplace, but critics say the program has helped drive up home prices, drive up defaults and hurt the ability of lenders to service the rising demand.

Banks are already struggling to keep up with the flood of borrowers.

The median monthly payment on California’s second-biggest bank, Wells Fargo, was $1,534 in January, according to data from Mortgage Bankers Association of America.

That’s more than four times the median monthly payments for all U.S. banks.

The bank’s latest quarterly results showed it reported $1.2 billion in losses.

The biggest banks have been caught short on funds in recent months as investors have pulled out of risky mortgages and they’ve had to seek additional loans to make up the difference.

Some banks have had to stop offering mortgages to borrowers with subprime or moderate credit scores, and others have closed down or cut back on other lending activities, such as foreclosure services.

More:Homeowners in California, Washington state to have new mortgage loans for first time in 20 yearsThe DFO is also urging banks and lenders to keep lending to borrowers at the “moderate” or “low” levels, meaning borrowers with less than 30 percent down and less than 50 percent equity.

For borrowers with at least 50 percent, the DFO has recommended banks make a new home loan application with a minimum of 50 percent of equity.

The guidance also urges lenders to consider making a new mortgage application to borrowers whose credit score falls below 150, and to provide the borrower with additional financial information.

The bank of America, for example, recently raised the minimum loan amount for borrowers with low scores from $1 million to $3.6 million, and from $2.75 million to the $4.5 million mark.

The regulator said it was also requesting lenders not allow their customers to borrow up to 20 percent of a borrower’s home to pay off a loan.

The regulator said the rule is intended to protect consumers and to ensure a borrower has access to the highest quality loans available.