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The U.S. housing market foreclosure epidemic has reached monumental levels, triggering an increase in the Housing Predictor foreclosure forecast.

The nation's economic health is at risk, according to Housing Predictor analysts, who have upgraded the forecast to top more than 3-million foreclosures through 2009. Evidence that the crisis is spreading into the nation's overall economy is mounting, producing nearly a 2,000 point drop in the New York Stock Exchange Dow Jones Industrial average in August.

The crisis threatens to produce a catastrophic recession if the U.S. Congress and the Federal Reserve Board of Governors do not act quickly to help those under going foreclosure and other investors.

The rate of foreclosures hit a record high in July, the last month for which figures are available at 0.65 %. But the crisis threatens to worsen when more than 2 million conventional adjustable rate mortgages are reset over the next two years to produce higher mortgage payments, many of which are held by investors who are unable to sell or rent their properties.

There are now more homes, condos and townhouses listed for sale across the nation than at the height of the U.S. Savings and Loan Fraud scandal. The inventory of pre-sold homes has decreased over the past two months, but the inventory of newer homes has increased. The nation's largest home builders have slashed prices in order to reduce inventories, providing incentives to buyers.

The credit crunch, however, has made it more difficult for many buyers to qualify for financing, adding to what is already seen as a housing crisis in the majority of states. But there are 14 states with local housing markets scattered throughout the south-east and the west that have markets which are appreciating.

The foreclosure crisis threatens the economic health of some of the nation's largest mortgage companies and has already forced more than 80 sub-prime mortgage companies either into bankruptcy or out of business all together.