The DeBlasios have been calling their mortgage lender for so many times they have stopped counting. They have talked with HUD-certified counselors, have explored short sale possibilities, have visited nonprofit housing agencies and have followed up on every possible foreclosure prevention option, but they failed.

They are now looking at two rental homes as their house is already in foreclosure.

Joseph Seneca, an economist working with Rutgers University, said foreclosure properties are growing by themselves because they are automatically pushing the cycle of foreclosure, low home prices, market collapse, national economic decline and unemployment.

The federal government launched months ago a program to contain foreclosure properties with billions in funding, with a goal of helping around 9 million troubled American homeowners.

But the program has not been working out as planned. According to the Federal Reserve Bank of Boston, only three percent of defaulting home loans across the country have been modified.

In New Jersey, the rate of loan modification is even much lower compared to the national rate. The state has even launched its own program in addition to the Obama administration’s federal program to contain foreclosure properties.

Under the state Mortgage Stabilization Program, the state will pay mortgage banks up to $25,000 for every distressed loan modified if the lenders lower the home loans to their current values. As of date, no lender has come out to take advantage of the state program.

James Silkensen, co-CEO of the banking group New Jersey Bankers Association, explained that no lender likes to lose so much money. He said that reducing the values of home loans to current value levels will wipe out their finances.

The DeBlasios bought their house in 2005 for $646,000 and then refinanced several months later when it was assessed higher at $730,000 to enable them to start a gasoline station business. At the start, they were able to make their $5,600 monthly payments. When the economy collapsed, their business collapsed and now their home is going to lists of foreclosure properties.

They worked out a short sale, but their lender America’s Servicing Co., one of the mortgage servicers of Wells Fargo, refused. Next month, their house is set to be auctioned off along with other foreclosure properties in New Jersey.

The agency’s desire to regulate the foreclosure prevention industry comes at a time when an increasing number of distressed homeowners have fallen victims to con artists who pretended to help them negotiate their loans with lenders to avoid repossession houses.

FTC Chairman Jon Leibowitz said that distressed homeowners who are in danger of losing their properties to foreclosures or struggling to pay their monthly mortgages should not have the added problem of being defrauded by unscrupulous people who promised them help that never materialized.

Leibowitz praised the efforts of Senator Byron Dorgan and Chairman Jay Rockefeller to give the agency the authority to develop standard and efficient rules to start regulating the foreclosure prevention process.

Meanwhile, the Mortgage Assistance Relief Services is studying the growth of the foreclosure prevention and loan modification services in the country. The FTC is seeking public comment to help it determine whether rules will be useful in protecting distressed homeowners from fraudulent foreclosure prevention services.

On the other hand, the FTC also wants to receive comments on the benefits and costs of restricting or prohibiting the payment of upfront fees for repossession house rescue and loan modification services. The public has until July 15, 2009 to submit their comments about the issue to the FTC.

Furthermore, the FTC also wants the public to comment on the Mortgage Acts and Practices law which deals with mortgage loan-related activities, including origination, marketing and advertising, loan terms, underwriting, appraisals, disclosures and servicing. Deadline for public comment for this issue is set on July 30.

Meanwhile, in California, Attorney General Jerry Brown has issued a policy requiring foreclosure prevention consultants to register with the state and post a bond of $100,000 on or before July 1.

Under Brown’s directive, failure to comply is a state law violation which is subject to fines of as much as $25,000 per violation and criminal penalties of a maximum of one year in prison.

Brown explained that by mandating that foreclosure prevention consultants submit pertinent information to his office and post a bond, he hoped to give transparency to the business and protect distressed homeowners from repossession houses fraud.

The increasing number of companies offering distressed homeowners a way out of bank foreclosure list has prompted state and federal regulators to call for oversight and regulation of the loan modification industry to save troubled homeowners from losing their money and properties to fraud.

Last April, the U.S. Federal Trade Commission said that law enforcement efforts should put a stop on the proliferation of fraudulent mortgage rescue schemes in the country, adding that fraudsters are targeting distressed homeowners who are desperate to save their properties from foreclosures but ended up losing their money and not getting the help that they needed.

New York Governor David A. Paterson has prepared a bill which would require companies offering loan modification services to register with the state. The bill would also regulate upfront fees which could reach 1 percent of the homeowner’s total mortgage.

According to Paterson’s counsel Gurav Visisht, some companies offering loan modification service are asking upfront fees as much as $3,000. The fraudulent scheme has also caught the attention of the state attorney general and the Banking Department.

Rholda Ricketts, deputy superintendent at the Banking Department, said that excessive upfront fees paid by distressed homeowners would be better placed on troubled loans.

Meanwhile, companies offering bank foreclosure list rescue service argue that what they are doing is perfectly legal. They do, however, welcome more oversight but do not want the whole industry to be put into a bad light.

Many industry experts believed that troubled homeowners, who are facing financial difficulties, should not be made to pay for something that they could get for free in the first place.

They added that marketing techniques of some loan modification firms deserve to be scrutinized. For example, some foreclosure rescue companies send letters of offer to distressed homeowners and they make them look like they come from lenders.

Others would call distressed homeowners whose properties are on bank foreclosure list. FTC Chairman Jon Leibowitz said that unscrupulous people do not hesitate to take advantage of distressed homeowners who are in a difficult situation.

National Modification Group Attorney Adam Kitzen said that not everybody in the loan modification business is bad. But he believed that the bank foreclosure list rescue industry will not last long because of the growing negativity attached on the business.

The bank will hire 200 employees for its downtown Milwaukee office in Wisconsin. Early this year, the bank reduced its downtown Milwaukee workforce by 270 employees. But with the increasing number of foreclosure filings, the bank had difficulty dealing with a big volume of loan modification requests from distressed homeowners nationwide.

According to Christine Holevas of Chase, the bank has new employees working at its Milwaukee office. These employees are focused on negotiating new loan arrangements with delinquent homeowners.

The bank is currently servicing a portfolio of about $1.5 trillion. In September last year, the bank added billions in its mortgage business when it acquired Washington Mutual.

In greater Milwaukee, Chase Bank has nearly 1,400 employees and about 950 in Milwaukee. According to Holevas, the bank, which is a unit of JPMorgan Chase and Co., operates 41 branches in the area.

The bank’s new hires will include negotiators, supervisors, loan specialists and underwriters. Holevas said that some of the new hires have already started their training.

In December 2008, the bank cited decreasing activity in the home-equity lending market as reason for reducing the number of its workforce in its home equity servicing unit in downtown Milwaukee. Holevas said that some workers who were dismissed in early February of this year were rehired for the loan mortgage servicing operation.

Holevas explained that bank officials prefer hiring employees in Milwaukee because they liked their work ethic. However, she said that she could not say how long the new jobs would last, adding that the bank’s employment needs are dependent on changes in the business and customers’ needs.

Chase is not the only bank in the country that boost the number of its staff to handle the increasing number of troubled loans. Banks such as M&I Marshall and Ilsley have implemented moratoriums on foreclosures as they try to modify loans to make payments affordable and help homeowners avoid repossession properties. M&I’s moratorium on repossession properties is set to expire on June 30 this year.

The charge of foreclosure rescue fraud was filed by Texas Attorney General Greg Abbott against several companies and their executives for allegedly defrauding their customers with bogus credit repair and debt counseling services.

Kerrigan also granted Abbott’s request to issue a temporary restraining order against the defendants, including United Servicing LLC, Bell Investments and Developments, Excel Loss Mitigation Inc. and directors David Espy and Frank Bell.

A charge of failure to file a bond with Texas Secretary of State has also been filed against the defendants. The posting of the bond is required from all companies that want to legally operate a business in Texas.

United Servicing or Excel, as it was previously known before a deluge of customer complaints forced it to change its business name, contacted distressed homeowners who were having difficulty paying their mortgages. According to a state-conducted investigation, the defendants used telemarketers who made false promises to distressed homeowners that their service could help them avoid foreclosures.

The investigation showed that telemarketers used a script to entice distressed homeowners that Excel and others could help them negotiate arrears, interest and late fees with lenders. The defendants would promise customers that their renegotiation would help them save their properties from foreclosures and even lower monthly payments.

The telemarketers hired by defendants even told homeowners not to contact or initiate a negotiation with their lenders when the truth is, it should be the first thing any homeowner who is facing the threat of foreclosure should have done.

To further convince homeowners to hire their services, telemarketers, on behalf of the defendants, told them that they would be able to cut up to three months worth of mortgage payments. For 45 to 60 days so-called negotiation service offered by defendants, homeowners were charged $1,500.

According to the investigation, the defendants made no attempt to contact and negotiate with lenders on homeowners’ behalf. As a result, many homeowners who availed of the defendants’ services lost their properties to foreclosures.

The Office of the Attorney General wants to impose a maximum of $20,000 in civil penalties for each violated provision under the Texas Deceptive Trade Practices Act and Texas Telephone Solicitation Act.

Meanwhile, homeowners are advised to avoid companies that offer bank forclosed homes prevention services that ask for upfront fees.

Gary Kalligher, co-owner of the Duluth unit of Re/Max, and 3 of his agents have been certified as distressed property experts after completing and passing a course in the use of short sale to prevent foreclosure.

Short sale can be used by homeowners who no longer have the income to keep up with monthly payments to prevent their properties from becoming foreclosed homes. If they avoid foreclosure, they are able to keep their credit records from being downgraded by foreclosure.

The role of the real estate broker who is experienced and trained in distressed properties is to find buyers who are willing to buy distressed homes at lower prices and negotiate with banks who are willing to accept purchase prices lower than the mortgage balances. More and more banks are willing to work out short sales because they want to avoid the cost of the foreclosure process and the costs of holding and maintaining foreclosed homes.

Steve Braman, one of the agents who have just earned a certification in short sales, said that mortgage delinquencies are erased from credit records within 2 years while data on foreclosed homes can stay in the records forever.

According to the Minnesota Home Ownership Center, the number of homeowners in Saint Louis County who sought foreclosure prevention counseling increased in 2008 to 586 from 242 the year before.

The center said that almost 5,000 homes were prevented from being added to Minnesota foreclosure properties in April because of the center’s counseling work. Around 26,000 houses became foreclosed homes in 2008, according to the center.

Short sale statistics in Duluth is difficult to determine, according to the Duluth Area Association of Realtors, because disclosure of short sale data is voluntary.

Re/Max agencies in Minnesota and in other parts of the country want to train their agents in the use of short sale as a foreclosure prevention option because foreclosures are costly both for the homeowner and the lender. Re/Max said the foreclosure process can take 9 to 12 months to complete and can cost much more than short selling.

On the other hand, the short sale process can be completed in a few months and will cost less than the foreclosure process. The realtors also said that they feel a deep sense of joy if they are able to help ‘ prevent their houses from becoming foreclosed homes.

However, the president did not go into details on how his administration will carry out its refinancing program to help owners of distressed homes.

Refinancing is one of the key elements in Obama’s foreclosure abatement program. According to initial details provided on the program, those eligible for refinancing are borrowers whose loans are guaranteed or owned by Federal Home Loan Mortgage Corp. and Federal National Mortgage Association.

Homeowners who owe mortgages that are more than the market value of their properties are also entitled to avail of the refinancing scheme to protect their properties from foreclosures.

Moody’s Economy.com data showed that borrowers whose mortgages are more than 80 percent of the current market value of their distressed properties are having a hard time getting a refinancing deal.

Currently, about 12 million homeowners or one in every seven households have mortgages that surpassed the total market value of their properties, a twofold increase from the nearly 6.6 million homeowners who were in the same precarious situation in 2007.

Meanwhile, the plan to reduce the number of foreclosed homes also includes an incentive to motivate mortgage services to help qualified homeowners to modify their loans. Mortgage servicers collect fees for delinquent and refinanced mortgages.

Under the plan, mortgage services will receive $1,000 for every mortgage loan they have modified. Additionally, they will also receive $1,000 annually for three consecutive years provided that eligible homeowners remain current on their mortgage payments.

Incentives are also offered to homeowners to help them pay their mortgages and avoid foreclosure. Those who continue to stay on their homes and are updated on their monthly loan payments will get as much as $1,000 balance reduction annually for five consecutive years. This incentive will help homeowners reduce their mortgage loan principal.

The Obama Administration has promised to provide more details about the foreclosure prevention plan on March 4, 2009.

For the meantime, troubled homeowners are urged to consult their mortgage lenders to determine if they are eligible for the refinancing program under the foreclosure prevention plan.

According to David Axelrod, senior adviser to the Obama administration, the country is facing an economic emergency and there is a need to move forward immediately to address several issues.

He reiterated the Obama Administration’s intention to address some of the country’s major problems, including foreclosures, declining home market values and difficulty of people to pay their mortgage loans.

Initial details of the housing recovery plan include over $50 billion funding to reduce mortgage loan payments and prevent the increase in the number of distressed properties.

The housing recovery plan was announced after the Congress approved the $787 billion economic stimulus bill that is expected to save or create jobs for 3.5 million people.

Meanwhile, in an interview with Bloomberg Television, National Economic Council director Lawrence Summer said the Obama Administration is prepared to tackle the problem of foreclosure by addressing housing affordability and payments.

While the White House is giving its assurance that the foreclosure crisis will soon be addressed, it is also cautioning people not to expect an immediate turnaround result from the economic stimulus program.

Axelrod made this point at the “Meet the Press” NBC show, when he said that efforts to revive the economy will not result in an overnight turnaround.

Furthermore, Press Secretary Robert Gibbs warned against being impatient as there is a possibility that things could worsen before any improvement could be seen.

On the other hand, the economic stimulus bill includes pay and bonus cap for executives whose companies are recipients of government aid. The bill received only three Republican votes in the Senate. Meanwhile, no Republican voted for the economic stimulus bill and seven Democrats also voted against it.

Explaining why he voted against the economic stimulus bill, Senator Lindsey Graham said that the plan does not create jobs but more governments.

Obama is expected to release details of the foreclosure prevention plan in Phoenix, Arizona, one of his stops in his road trip to gather support for his economic stimulus bill.

Learn how to find foreclosure properties.