CHICAGO | Attorney General Lisa Madigan on Monday called on mortgage lenders to re-energize their efforts to reduce mortgage foreclosures in light of new data showing prevention attempts declined this year despite the rising number of homeowners in trouble.

Madigan is a member of the State Foreclosure Prevention Working Group, a group of state attorneys general and banking regulators, which recently issued an Analysis of Subprime Mortgage Servicing Performance report.

Although loan servicers have increased their use of loan modification as a tool to avoid foreclosure, the number of borrowers working with their loan servicers to avoid foreclosure has declined, the report states.

Loan modifications for at-risk homeowners dropped 28 percent from January to May and lenders have not developed an effective strategy to confront default loans before interest rates rise, the report states.

"Now, nearly 80 percent of borrowers who are seriously delinquent are still not getting the help they need to try and save their homes," Madigan said. "The message from this report is clear: Lenders must develop a broad and systematic approach to putting homeowners into affordable loans that will stave off the devastating effects of foreclosures in our communities."

The report indicated that 38 percent of subprime loans were in the process of foreclosure at the end of May.

An estimated 1.7 million adjustable rate subprime loans are scheduled to reset across the nation through 2009, including many of the approximately 200,000 subprime loans held by Illinois homeowners.

Illinois is among the top 10 states nationally for foreclosure activity. In 2007, Illinois experienced 90,782 foreclosure filings, a 25 percent increase in foreclosure activity over 2006, according to RealtyTrac, a national foreclosure data service.

The south suburbs are part of the trend. According to the Woodstock Institute, Calumet City had 470 foreclosure filings in 2007, Lansing had 201 and South Holland had 289.

Lansing Village President Dan Podgorski said it's imperative people contact their lenders and attend workshops designed to help.

"Whenever people get in trouble with finances, unfortunately there are a fair amount of folks who open up notices and instead of doing something about it, put it in the drawer and hope it's going to go away," he said.

"Obviously that's not going to solve the problem. Our advice to anybody facing foreclosure is obviously call your lender immediately and try to work something out. Really, the last thing the lender wants to do is foreclosure. They are not in the business of owning property and managing property."

To help make homeowners more aware of their options at the start of the foreclosure process, Madigan drafted the Homeowners' Rights Act, which became law last week. Beginning Jan. 1, the act will require lenders to provide borrowers with a clear statement of their legal rights and options when served with a foreclosure suit.

This statement must advise homeowners that they can sell their home, refinance or pay off the loan during the redemption period. It will also advise homeowners to call their mortgage company to discuss alternatives to foreclosure.

The law also will require lenders to provide borrowers with an accurate statement of the outstanding mortgage balance within 10 days of the borrower's request.

Madigan urged those facing foreclosure to immediately contact their mortgage company or a HUD-certified housing counselor for assistance. Homeowners can call Madigan's Homeowners' Referral Helpline at (866) 544-7151.