Inaction and corporate bailouts have defined the federal government's response to the foreclosure crisis, so it's not surprising that some stretched homeowners aren't receiving the assistance they need. But a newly released study shows the situation may be worse than once thought.

According to the State Foreclosure Prevention Working Group, a committee made up of banking regulators and attorneys general in 11 states, seven out of 10 borrowers who are seriously delinquent on their mortgages aren't on track to receive any kind of help with their payment problems. While some delinquent borrowers have started working with their lenders, rising defaults have outstripped those gains. And the cases aren't going away. The Wall Street Journal explains:

But the report also suggests that mortgage servicers have been overwhelmed by the flood of delinquent loans, with seriously delinquent loans -- those 60 days or more past due -- "stacking up" on their way to foreclosure ...

State officials say the current system for handling troubled loans -- which requires that each borrower's situation be evaluated on a case-by-case basis -- is ill-suited to handle the recent surge in delinquencies. They called on mortgage servicers to boost their staffing and to take a more systematic approach in their efforts to work with troubled borrowers Mortgage services need to treat like borrowers "in like ways" in order to move the process in a more efficient manner," says New York Superintendent of Banks Richard Neiman.

Illinois Attorney General Lisa Madigan, a member of the group that authored the report, urged lawmakers to help, calling on the federal government "to develop innovative approaches that recognize the extent and scale of the foreclosure crisis." Those types of approaches certainly exist and have been proposed by congressional Democrats. Problem is, they always seem to get weeded out.

Take for instance a provision in Rep. Barney Frank's (D-MA) House bill that would have allowed mortgage providers to assess multiple loans at once -- it was eviscerated by Republicans fearful that "undeserving" borrowers could win assistance if their specific cases weren't weeded out. Another plan to help cash-strapped homeowners avoid foreclosure would amend the bankruptcy law to allow judges to rewrite the terms of home mortgages -- an act the grotesque 2005 bankruptcy bill now prohibits. Unfortunately, Sen. Dick Durbin's Senate amendment proposing this change was stripped earlier this month.

Graphic courtesy of Crain's Chicago Business.