Despite widespread public attention and efforts by the private and public sectors to address the foreclosure crisis, most borrowers at risk of losing their homes remain very close to foreclosure, according to a new report issued by the State Foreclosure Prevention Working Group.

The group, composed of state attorneys general and state banking representatives, found that seven out of 10 "seriously delinquent" borrowers are not involved in any efforts to work out their mortgage problems with their lender or loan servicer. ("Seriously delinquent" in this report means the loan payment is more than 60 days past due.)

That is roughly the same percentage as several months earlier, before foreclosure prevention outreach began.

Part of the problem may be the sheer numbers involved. "Data suggests that loss mitigation departments are severely strained in managing current workload," the report states. Between October 2007 and January 2008, the number of seriously delinquent loans increased 25 percent, to 1,025,508. Yet most lenders and servicers still are handling each case individually as it moves toward foreclosure, which could be averted by modifying the loan terms or negotiating a repayment plan with the borrower.

"New approaches are needed to prevent millions of unnecessary foreclosures," the report says. "Without a substantial increase in loss mitigation staffing and resources, we do not believe that outreach and unsupervised case-by-case loan work-outs, as used by servicers now, will prevent a significant number of unnecessary foreclosures."

The group advocates taking a more standardized and efficient approach to help homeowners keep their homes. It also recommends changing foreclosure timetables so that lenders and borrowers have more time to agree on a solution. Sen. Hillary Clinton (D-N.Y.), who is running for the Democratic presidential nomination, has proposed a 90-day moratorium on foreclosures. Other states, such as New York and Minnesota, have also discussed similar actions.

Alison Rice is a contributing editor to Builder Online.