New York ? Citing rampant problems of fraud and extortion, the State Department says it no longer recommends that Americans adopt children from Guatemala – the No. 2 source of orphans coming to the United States.

Some adoption officials are outraged, calling the move a de facto suspension and an overreaction that will cause more harm than good, leaving hundreds of children stranded in Guatemalan foster homes.

“It’s inflammatory; it’s insensitive to people’s feelings,” Thomas Atwood, president of the National Council for Adoption, said Friday. “People all across the country in the process of adopting from Guatemala are frightened right now.”

Adoptions from Guatemala are popular because of relatively swift procedures and have increased steadily in recent years, reaching 4,135 in 2006 – second only to China. Yet U.S. officials have pressed Guatemala for anti-corruption reforms, saying there were frequent cases of birth mothers pressured to sell their babies and adoptive American parents targeted by extortionists.

This week, the State Department issued a new, detailed advisory saying: “We cannot recommend adoption from Guatemala at this time. : There are serious problems with the adoption process in Guatemala, which does not protect all children, birth mothers, or prospective adoptive parents.”

The advisory stopped short of imposing a ban on adoptions from Guatemala, but said cases would be scrutinized more closely than before and reviews would take longer.

“Adopting a child in a system that is based on a conflict of interests, that is rampant with fraud, and that unduly enriches facilitators is a very uncertain proposition with potential serious lifelong consequences,” the advisory said. “When you decide whether to move forward with adoption in Guatemala, you should consider factors beyond timing.”

Atwood said the advisory amounted to a “de facto suspension.”

“What parent now is going to enter an adoption program for Guatemala?” he asked. “What’s going to happen to 2,000 kids waiting in foster care there?”

Atwood said his council, one of the nation’s largest adoption advocacy groups, shared the State Department’s concerns about Guatemala, but wanted to continue adoptions to the U.S. while encouraging in-the-works reforms. Pending proposals would create a central authority in Guatemala to tighten regulation of an adoption industry long dominated by notaries who function as baby brokers.

Catherine Barry, deputy assistant secretary of state for overseas citizens services, said the State Department had not given up on the prospect of reforms in Guatemala and would continue to review – with extra scrutiny – adoption cases already in the pipeline.

But for parents just considering an adoption from Guatemala, the message should be clear, Berry said.

“If you’re at a preliminary stage talking to adoption agencies, then we think you can draw the fair conclusion not to start a new application,” she said in a telephone interview.