The increase of home foreclosures has created a plethora of fraudulent foreclosure prevention companies popping up across the nation. In addition, overwhelming reports are recorded of homeowners paying exorbitant upfront contract fees only to later discovery no one has spoken to the mortgage company on their behalf. This unfortunate surge of fraudulent activity has prompted the State of Illinois to pass legislation regulating these foreclosure consultant companies.

Recently, the Illinois bankruptcy-attorney.shtml">Attorney General filed suit against more than a half of dozen firms promoting foreclosure prevention services. These firms crossed the legal line of operation by charging up front fees and for failure to clearly define their services and manners of foreclosure mitigation on its agreement contracts. Additionally, the Illinois law states the distressed homeowner should be able to back out of the contract anytime without cause. The Illinois law was created to prevent these firms from preying on stressed and anxious defaulting homeowners.

Recent housing statistics show a 25 percent increase in the rate of residential mortgage foreclosures. This incline in defaulting mortgage loans equated to over 250,000 homeowners receiving foreclosure notices each month since the autumn of 2007.

Many states have responded to these historically high numbers of foreclosure notices and increasing unemployment rates by passing legislation to temporarily stop foreclosures. Housing statisticians say the housing market statistics may not reflect the true numbers of actual lost homeownership. Bankruptcy, short sales and state legislation have aided and slowed the foreclosure process for many homeowners. However, the facts still remains that foreclosure rates are steadily increasing and have consistently grown by a record high, each month, over the last three years. As a result, since August 2007, nearly 1 million homes have been sold in a foreclosure auction.

In an effort to stave a off a further decline in the housing market, the government has announced a plan to prevent foreclosure for homeowners with mortgages guaranteed by Fannie Mae and Freddie Mac. The plan will provide some relief to a small fraction of the still growing number of distressed homeowners. The government hopes that similar programs will be adopted by financial institutions to head off further losses by the banks and the America homeowner.

The government’s mortgage rescue plan will adjust mortgages by lowering interest rates, extending amortization periods from 30 to 40 years and allowing balloon payments at the end of the loan term to defer loan principal. These efforts are being made to bring mortgage payments below 38 percent of the homeowners’ monthly gross income.

Some banks are testing similar programs that even extend to homeowners not in default. These rescue plans are being emphasized in highly depressed economic areas, like Michigan. Michigan has experienced a higher than national average of unemployment and coupled with the automotive industry woes could see an even more dramatic increase in home loss.

Many of the program’s critics think the plan to save homes will only delay the inevitable foreclosure of these saved homes. Secretary of Treasury Paulson’s announcement that the $700 billion bailout would not be used to buy troubled mortgage-backed securities, drove the stock market way down and projected an even bleaker future for the housing market. The government’s new mortgage plan could potentially aid hundred of thousands of struggling homeowners, breathe some life into an ailing housing market and eventually assist in turning the nation’s economy around.

Webster Financial Corporation has announced a suspension of foreclosures for at least the next 90 days, following other companies that have instituted a moratorium on foreclosures like CitiMortgage. Qualified mortgage holders included owners who are more than 30 days behind on their mortgage as of Nov 4, 2008. Webster will try to come up with affordable payment options for the delinquent home owners to help them get back on track.

Webster is also making contact with at risk borrowers to see if they need help to maintain the ability to continue making payments.

Like other mortgage companies, Webster is using lower interest rates, longer terms, refinancing and lower payments in order to stave off foreclosures. Customers with questions about these programs can contact Webster’s loan customer service center at 1-800-270-5400.

As foreclosure rates increase across the country, stress levels are rising amongst families that are at risk of losing their homes. Unfortunately stigma is still attached to financial problems including foreclosure and bankruptcy and some people are succumbing to fears of facing their situation.

KXNT in Las Vegas is reporting 2 deaths that appear to be murder-suicide due to their home being in foreclosure, and other suicide cases are being reported across the country.

If you are facing foreclosure, please contact your lender and a bankruptcy attorney, and if you are depressed please speak to your doctor.