Prime Suspect

Cleveland is on the front lines of a housing boom gone sour. So how are the bankers, brokers, and speculators still generating massive profits?

The modest frame homes on East 76th Street, in Cleveland's Slavic Village neighborhood, strain to accommodate the 21st century. When Barbara and Robert Anderson's daughter gave them a 60-inch TV after getting her first job out of college, Barbara put it diagonally in the corner of the living room because the wall wasn't wide enough to fit the set.

Other than that, the house has served the Andersons well in the nearly 25 years since they bought it for less than $30,000. Beyond a living room festooned with pictures of grandchildren is the walk-through dining room, its long wooden table equipped with chairs for a dozen guests, and a bright kitchen with enough room for Robert to marinate his grill specialties: shrimp, ribs, and the fish his grandchildren catch in Sandusky Bay. Up a steep flight of stairs the Andersons have created another living area, with deep maroon carpet and bedrooms on either side. After Barbara's sister fell fatally ill with cancer in 1982, this was where the couple's five nieces and nephews came to live. Being homeowners "meant a lot to us," Barbara says. "We would be part of a neighborhood."

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These days, the neighborhood is barely hanging on. A freight train heaves slowly across the rails at the dead end of East 76th, but another noise clanks louder: a scrap yard around the corner chewing aluminum and copper late into the evening. Raging development in China is driving up scrap prices; at Jack M. Levine & Sons on East 79th Street, copper fetches more than $3 a pound and aluminum about a dollar. That's one reason why, all over the neighborhood, houses stand plundered of their heating ducts, wiring, and siding, looking naked in the winter cold. Of the 20 houses that stood on the Andersons' block when they moved in, only 11 are still occupied; of the remaining 9 houses, 6 have been boarded up in the last two years by banks foreclosing on the owners. One has since burned down; the others have had their siding pried off, row by row, and carried away in shopping carts. Only one house has been spared -- it is clad in worthless vinyl.

Blight is usually a sluggish process; it crawls into neighborhoods almost imperceptibly, prodded along by demographic shifts and economic upheaval. East 76th, though, was intact just three years ago. The economy doesn't explain the sudden change: Though northeast Ohio has lost jobs in recent years, the neighborhood has survived times when unemployment was more than twice its current level. Slavic Village has fallen prey to a more complicated force -- unbridled mortgage lending, and the increasingly sophisticated tools that Wall Street uses to wring profits out of the places we live in. The withering shells of East 76th Street were among 376 houses foreclosed upon in Slavic Village last year; for all of Cuyahoga County, the total was more than 11,000, four times the number a decade ago. More homeowners are losing their property here than anywhere else in Ohio, which in turn has a higher foreclosure rate than any other state.

But it's not just Ohio that is beginning to glimpse the dark side of the housing boom. Even as Americans have been mesmerized by skyrocketing home prices and a homeownership rate that now stands at 69 percent (up from 64 percent in 1990), foreclosures have spread like mold in a basement. Between 1980 and 1997, the foreclosure rate tripled nationwide, to about 1 percent of all mortgages at any given time. Since then the rate has remained stable, but with more and more mortgages in circulation, the total number of foreclosures keeps rising. The Mortgage Bankers Association of America counted about 408,000 foreclosures in 2005, up from 259,000 five years earlier.

For a homeowner, foreclosure is a cataclysm of both practical and psychological dimensions: the challenge of losing one's home, the drain of ruined credit, and the shame of having failed at the American Dream. For the other players involved, though, foreclosures are merely a small cost of doing business in a lucrative market. Until the mid-1990s banks only lent to borrowers with more or less sterling credit. Now, with a quick spreadsheet calculation, lenders can find a loan to suit almost any customer -- at the right interest rate, and often with outsize fees. Even if a few borrowers fail to keep up, banks will still make money since they can repossess and resell those properties.

The players below the banks on the real estate food chain -- the speculators who flip properties, the freelance mortgage brokers who shop around for the right appraisal -- also have little to worry about; they exit the scene as soon as a deal is closed. The only losers in the game are buyers with modest incomes moving into the first homes of their own. Even if they manage to hold on to their homes, chances are they'll see a few neighbors lose theirs -- and, like the Andersons, they'll be left picking up the pieces.

Slavic Village is the childhood home of Rep. Dennis Kucinich (D-Ohio), a proud precinct of polka halls and kielbasa shops. Homes around here are inexpensive, by East or West Coast standards -- a nicely restored house, on an intact block, now sells in the $90,000s. But across all of east Cleveland, one of every four homes sold last year was auctioned at a sheriff's sale. "It's devastating," Barbara Anderson says. "It really hurts to see these properties right across the street from you, to look out at them every day, trying to do everything you can to keep your property up, and you know you're fighting a losing battle." Anderson is president of the Bring Back the 70s Street Club, which held its first meeting two years ago in her living room. Since then, the club has cleaned up the piles of tires that lined the rail embankment, helped train neighbors to watch out for crime, groomed a new community garden, and stenciled house numbers on curbs so emergency responders can find addresses.

But each month, the neighborhood has fewer and fewer addresses to mark. Across the street from the Andersons, a week after New Year's, Wendy Wright asked her neighbor Will Lofton to hold her mail until the next time she came by. A few days later, a moving company piled her family's possessions in the street -- a snow-flocked display of furniture, sheets, sweaters, and board games, punctuated with an orgy of nude Barbie dolls. The movers had been hired by Household Realty Corp., a division of HSBC that lends to borrowers with low credit scores, including the woman who was Wright's landlord. Household bought back the house at a sheriff's sale in December. (Banks buy back their own property at foreclosure auctions because legally the houses still belong to the people who took out the mortgage; all the bank owns is the loan.) Household had already reclaimed a bungalow three doors down at 3422 East 76th, home to a couple who worked in the broom-and-mop factory nearby.

The Andersons' house has been on the auction block a few times, too. The $28,900 loan they took out when they bought it came with a 13.5 percent interest rate, not unusual in 1982. By the time they faced foreclosure in 1998 -- after Barbara left her job to care for Robert, who depends on a dialysis machine -- they owed just $106 less than they had borrowed. The house was set for auction four times, most recently in the summer of 2003, and each time the Andersons managed to get the sale called off. In the final round, a group called the East Side Organizing Project helped the couple pull their house out of the sheriff's sale and got them a lower-interest loan. Now, Barbara Anderson has found a new calling as the organization's treasurer.

Anderson has knocked on doors all over the neighborhood to help homeowners in trouble. "You pass out literature and try to make people feel comfortable. A lot of people just give up." And more and more of the owners are investors who don't live here. "People come to strip the neighborhood -- to use it and abuse it and leave it." Slavic Village has about 500 abandoned houses, close to 5 percent of all the buildings in the neighborhood.

But while Ohio's home crisis is most acute in Cleveland, the rest of the state is catching up fast. Ohio had 16,000 foreclosure filings a year in the mid-'90s; today there are more than 60,000. Five percent of mortgages in the state are either in foreclosure or close to it; nearly 39,000 Ohio homeowners have fallen at least two months behind on their payments.

Robert Perry got laid off from his assembly line job at Alcoa's Cleveland aircraft wheel assembly plant in 2002. He took the only alternative Alcoa offered: a gig as a janitor, at $16 an hour. His mortgage was $900 a month. After he fell behind, his mortgage company proposed a monthly payment of $1,200. When he still couldn't keep up, the lender proffered another deal: a $2,565 lump payment and $1,000 a month. The entire payment was due the last day of that month. Perry wouldn't get paid until the first of the next. He came up $250 short, so Bank One, which held the mortgage, moved to foreclose on his home of 14 years.

Unlike other homeowners facing foreclosure, Perry and his family didn't wait for the sheriff's sale. "As soon as we found a place to rent, we moved," he says. "With four kids, we had to make sure we had a place to stay." But their ordeal continues. A year after the foreclosure started, Perry's house hasn't gone to a sheriff's auction, and Perry is still responsible for its upkeep. Sitting on a bench in the county courthouse, he picks nervously at his fingernails. A judge just told Perry he faces 10 days in the workhouse if he doesn't repair the garage's corroded siding.

Cuyahoga County's courts have been flooded with foreclosure cases, to the point that the standard six-month procedure now takes a year and sometimes two. "Crushing is the word," Chief Magistrate Stephen Bucha says of the caseload. Bucha routinely throws out cases because of typos and other paperwork errors, a practice that enrages bank lawyers.

Bucha sees plenty of laid-off steel- and autoworkers in his court, but he says the job losses alone don't account for a crisis that began in 1995, five years before unemployment in Ohio began to rise. "It started because of changes in lending practices," says Bucha. "Banks were willing to make higher-risk loans at higher interest rates."

Subprime lending is now an established presence on the banking scene. What began as a way for borrowers with poor credit to get loans, albeit at higher interest rates and with extra fees, has become a booming business that often targets customers who could qualify for less expensive "prime" mortgages but don't know it.

In the Cleveland area, one out of every five mortgages is subprime, and in Slavic Village subprimes account for more than half of all loans. Subprimes are much likelier than other mortgages to end up in foreclosure, even taking into account the usually shaky finances of their borrowers. Many of the loans are burdened with penalties for early repayment (which makes it tough to refinance at lower rates) and expensive mortgage insurance that is charged to buyers who make small down payments.

On Wall Street, though, high risk means high returns. Investment banks buy up thousands of loans at a time from mortgage companies, pool the loans into trusts, and then resell shares in these funds to investors. In 2004, the U.S. market in these mortgage-backed securities approached a record $4.7 trillion. Mortgage-backed securities that include large numbers of subprime loans are the most lucrative, bringing returns of up to 15 percent. Ohio isn't on Wall Street's radar: Its foreclosure disaster is just a dent in a shiny moneymaking machine. "Cleveland is the sacrificial lamb so the lenders can make more money everywhere else," says Mark Wiseman, who runs a foreclosure prevention program at the Cuyahoga County Treasurer's Office.

Wiseman is tracking foreclosures in parts of the county that never had them before -- way out into the suburbs. In the town of South Euclid, down the block from a wooded creek where herds of deer gallop freely, a modern ranch with an in-ground pool stands rotting, its foreclosure, on a subprime loan, tied up in the homeowners' bankruptcy. South Euclid has about 150 vacant houses; a few years ago it had about 40. The nearby latte-and-yoga enclave of Cleveland Heights has another 200 or so vacant homes; 133 went to sheriff's sale in 2004 alone.

"This is rampant -- a free-for-all," says South Euclid Mayor Georgine Welo, who leads a group of suburban officials pressing the county to speed the foreclosure process, freeing vacant homes to be resold. "It's predatory lending, inflated appraisals, brazen financial companies."

In Cleveland, as elsewhere, the real estate market is rife with investors who flip houses for a profit and often target first-time buyers. The sellers send the buyers to independent mortgage brokers, who get paid once they close a deal. "The primary incentive for brokers is fees, and if you make the loans, whether they perform or not, you've 'earned' your fees," says Prentiss Cox, a law professor at the University of Minnesota who until last year led a multi­state investigation of subprime giant Ameriquest Mortgage Co. "That gives the brokers tremendous incentives to close the loan, and very little to make sure those loans are in the best interest of consumers."

The more loans the brokers sell, the more fees they make. To keep the fees rolling in, some brokers work with appraisers who are willing to vouch that a home is worth whatever a seller claims it is -- often twice its value, or more. Unlike most states, Ohio does not require appraisers to be licensed.

"We have $20,000 or $30,000 houses selling for $80,000 and $90,000," says City Council member Anthony Brancatelli, who represents Slavic Village. "The appraisal is fraudulent, and the lender puts money in their pocket."

In the wealthy heart of Shaker Heights, where sprawling 1920s homes sit clustered around shapely parks and lakes, an 18-room Tudor mansion looms vacant, its ballroom with vaulted wraparound windows ruined a couple of winters ago by burst pipes. A speculator bought it in 1998 for half a million, figuring he'd flip it for much more. When that didn't work out, he sold it to a phantom buyer for whom he engineered two loans totaling $1.1 million, more than doubling his investment. The buyer never made a payment, and last August, Credit Suisse First Boston repossessed the mansion for the minimum bid of $233,334. It was one of 74 foreclosures in Shaker Heights last year -- almost as many as the neighborhood saw at the height of the Depression.

A few blocks away, retired steelworker Steve Zsigrai lives with vacant foreclosed houses on either side of him. His ex-wife insisted on moving to the upscale suburb almost 40 years ago. Now, Zsigrai says, "Shaker lives in la-la land." At a sheriff's sale in December, Deutsche Bank bought back the modest brick house on his left from Adele Eisner, a massage therapist. On an annual income of just $26,000, she had borrowed $197,200 from Argent Mortgage to refinance a high-interest loan on her new home and pay off other debts. She went into foreclosure less than eight months later, owing Argent $233,000. The bank had loaned her nearly three times the county's assessed value of her house.

Argent sells more mortgages than any lender in Cleveland, and it took just one year to hit No. 1. Nationally, the company has grown at an equally explosive rate. Born in 2000 as a division of Ameriquest, Argent made more than 256,000 loans in 2004 -- far more than its hyper-marketed parent company, sponsor of the Rolling Stones' "A Bigger Bang" tour, the Super Bowl halftime show, and the Texas Rangers stadium.

In January, responding to complaints that Ameriquest reps had aggressively pushed customers to refinance over and over again and misled many of them about the cost of their monthly payments, 49 states reached a $325 million settlement with the company. Ameriquest agreed to disclose interest rates and fees up front, use independent agents at closings, and refinance loans only if a transaction benefits a borrower. (The Ameriquest settlement doesn't affect Argent, which was spun off as a separate entity in 2003; both Ameriquest and Argent are now part of a shared parent company, ACC Capital Holdings.) After the settlement was announced, Massachusetts Attorney General Thomas Reilly -- whose opponent in the Democratic primary for governor is on the board of the loan giant's parent company -- called Ameriquest "a very bad company engaged in despicable practices."

The man who presided over those practices was by then already packing his bags. In February, the Senate Foreign Relations Committee unanimously confirmed Ameriquest's founder, Roland Arnall, as ambassador to the Netherlands. Arnall and his wife, Dawn, have given more than $6 million to Republican candidates and organizations since 2000; the Arnalls were honorary finance chairs of the president's second inauguration.

Argent has a loan product for pretty much any customer: borrowers whose income isn't enough to justify a mortgage, borrowers with horrific credit scores, borrowers who want to buy a second home, who want to pay interest only for five years, who want a 40-year mortgage. These options and more are priced on an a la carte menu. Argent denies just 6 percent of applications.

When borrowers don't earn enough to qualify, some brokers turn to fiction. Catherine Chaney was earning about $1,600 a month as a hospital aide when the broker who had just helped her buy her first home -- a yellow bungalow south of Shaker Heights -- told her she could lower her mortgage payment and get some cash for repairs by refinancing with Argent. She needed the lower payments; the mortgage was far too expensive for her to keep up with. But she had to make more money, he explained, to qualify for the refi. "He wanted me to send a letter saying my income was $3,000 a month," says Chaney. She reluctantly wrote it. "I was locked in -- it was like, 'Take this or be homeless.'" But the new loan turned out not to be cheaper at all. Her interest went from just over 6 percent to nearly 9. Her old loan included property tax payments; the new one did not. And because the broker allowed her to borrow far more than her home's actual value, she now can't sell the house or refinance it. Months behind on her payments, all Chaney can do is work overtime while negotiating with Argent to get her old interest rate back. She still could lose her home.

Argent Mortgage defends its lending practices. "The performance of Argent loans is as good or better than other lenders in the industry," says Chris Orlando, a spokesman for both Argent and Ameriquest. "Argent takes a number of steps to monitor and select brokers. We require extensive licensing documentation, require regular audits and background checks, and review the quality of the loans that brokers submit." Every appraisal, says Orlando, is either reassessed by a licensed appraiser or checked with an automated comparison with local property values. As for brokers, the company's website points out, Argent sells loans through independent agents over whom it has limited control.

Ohio is one of just two states (the other is Virginia) whose consumer protection laws do not apply to mortgage lending. Borrowers who have been ripped off can't go after the Wall Street investment pools either -- funds that buy mortgages are not legally responsible unless managers knew that a loan they purchased was fraudulent. In this oversight vacuum, the FBI has become Ohio's de facto mortgage fraud enforcer. But rather than targeting predatory lenders, it has gone after an easier mark -- the speculators. In Cleveland, FBI agents are reportedly investigating a single mother living in subsidized housing who bought five houses in a day, and a night-shift postal worker who bought four, all with Argent loans and all in foreclosure.

The FBI is also talking to Nicole Farrow. She briefly owned the vacant house at the very end of Barbara Anderson's block, the one with empty bottles of Thunderbird on the porch and large holes carved in the drywall where fixtures used to be. The entire heating system is gone. The sink has been ripped out of the house's only bathroom, a fetid space in the basement. Just a few signs of life persist: "Destiny's Child" and "Aaliyah" scribbled on a bedroom wall upstairs; a baby bottle on the linoleum downstairs, near piles of broken glass.

In late 2004, Ameriquest foreclosed on the property's absentee owner. Ameriquest turned around and sold the house to an investor; that investor resold it a couple of months later to Farrow. It wasn't the only Cleveland house Farrow purchased. Between February 2004 and June 2005, her name shows up in conjunction with eight properties, purchased with a total of $465,000 in Argent loans.

Farrow made for an unlikely real estate investor: pregnant, racked with severe morning sickness, and recently relocated from Las Vegas. "I didn't even have a job," she says, sitting in her mother's suburban dining room, its table covered with stacks of mortgage papers. What she did have was a boyfriend looking to close some real estate deals. "'Cleveland is a hot market,' he told me. 'We can make good money.'"

What the boyfriend wanted to do was use Farrow's credit to take out loans; he would then sell the houses back to himself, a company that his sister controlled, or other collaborators, getting the properties reappraised at much higher prices and -- through Farrow -- pocketing the difference. They did manage to flip some of the houses, but others didn't sell. Scarcely a year after Farrow bought the houses, she was in default on two that she still owned, and two of the ones she'd sold were also in foreclosure. Among the papers she has kept is the appraisal for her property on East 115th Street, bearing a photo of an aging but tidy building. The house she in fact bought has a blue tarp blanketing the empty window frames along one side, and a collapsing second-story porch that is missing all its banisters. Workmen had been gutting the place up until the day Farrow purchased the property.

Last year, Farrow left her boyfriend and moved with her infant son back to her mother's house. She also took her ex to court on domestic violence charges, and got a judge to grant her a five-year order for protection.

Farrow used to sell insurance in Vegas, and she considers herself reasonably educated about personal finance. Her real estate mistakes, she insists, were made under the spell of her boyfriend, who, she says, eventually took to buying properties in her name without showing her the paperwork at all. After leaving him she joined a support group for abused women, and she wants to figure out how to make a career out of counseling women not to get involved in real estate investment schemes on behalf of the men in their lives. "It's a new form of what they did when they sent women out to prostitute," says her mother, Christina Burke. "Now they're prostituting their credit."

A federal judge sentenced the ringleaders of an operation that bought dozens of houses in and near Slavic Village from 1999 to 2002, reselling them to investors at wildly over-appraised prices. Christopher Siedlecki, who has since pleaded guilty to 14 counts of fraud, bought a house on East 53rd Street for $34,000. He then sold it to Lawrence Reasor for $61,500, in a transaction financed by a small mortgage company called Entrust. In 2003, Reasor refinanced with a $68,000 Argent loan; he went into foreclosure in March 2005.

Argent ultimately financed six other homes on the same block of East 53rd Street, several of them appraised at double and triple the value of their neighbors. Four are already abandoned. Because of cuts in federal funds, the city had to suspend a program to demolish abandoned buildings; now the houses simply stand boarded up and decaying. Reasor's robin's-egg-blue rooming house is one of them. "I couldn't rent it out," Reasor says, sitting in his South Euclid living room. "It's a high-drug area."

Reasor knows about the drug business: He served time in state prison in the mid-1990s on a trafficking charge. Real estate is a different game, but as in the drug trade, the product is easy to obtain. A fatal problem for investors like Reasor is that low-income rental demand has suddenly dried up. For two years now, Congress has been cutting funds for housing vouchers for low-income tenants. Cleveland real estate agents say the loss of vouchers has contributed to the blight on streets like East 53rd, as owners who bought at high prices expecting a steady stream of rental income found those payments dwindling.

Some business owners have been trying to hold Slavic Village together. Vince Collazo, a local demolition contractor, has offered to knock down derelict houses free of charge, though so far neither the city nor the banks have been willing to extricate the homes from their legal limbo. Third Federal Savings and Loan has kept its headquarters on Broadway, in the heart of the neighborhood, and has recently expanded it. The owners of the new Seven Roses Café restored a 19th-century storefront on Fleet Avenue, and visitors from downtown and the suburbs come for a taste of pierogi, beet soup, and paczkis.

Neighborhood advocates have also been heartened by a big victory at the state Capitol this year. The banking industry has historically managed to block lending reform, but the foreclosure plague -- which has spared no corner of the state, including solidly Republican districts -- has begun to weaken the banks' clout. In May, the Ohio Legislature passed a bill requiring banks and brokers to fully inform borrowers about the amount of their monthly payments, and giving customers a way to sue brokers who defraud them. The state will also, for the first time, license appraisers. Advocates for the reforms got an unintentional assist from the auto industry, which during the same session pushed demands that car-loan standards be made as lax as those for mortgages; instead, the Legislature brought most mortgages up to the standards for car loans.

Still, the new law won't help anyone who has already taken out a loan, and it won't take effect until 2007. Says Cuyahoga County's Mark Wiseman, "It's like telling the terrorists we're going to start checking the borders next year."

The auditorium of the Cuyahoga County Justice Center comes to order with the weary anticipation of a track before the first race. The orange plastic chairs seat citizen investors hoping for a deal -- men in work boots and quilted nylon jackets; earnest and worried-looking couples; a woman in the back row whose face is scarred with acid burns.

Todd and Yovette Gardner are among them. They own their house in South Euclid, but now they want to get into the real estate investment business. Todd isn't interested in being a landlord; he was convicted of assault after he beat up a tenant in the couple's duplex. Instead the Gardners aim to flip their purchase. "It's an investment, a way to make money," says Todd, who has kept his leather cap and jacket on in the auditorium. "I'm going to fix it up and sell it." The couple have their eyes on a brick house near the Cleveland Clinic whose bidding starts at just under $17,000. They end up buying it for $24,000.

A week later, the day's first auction is Argent Mortgage v. Charity Stewart, et al., starting bid $36,667. Argent had financed the home less than two years earlier, for a 33-year-old grandmother who bought it because it was easier than renting.

Charity Stewart wasn't waiting for Argent to throw her out. The night before, Stewart took the garbage bags she'd been piling at the front of her living room for a week -- everything she could transport from her brief life as a homeowner -- and brought them and her seven-year-old daughter, Charday, to her sister's apartment. Stewart's 17-year-old son, Jamal, lives with Stewart's mother so he can be near his high school football field and his new baby boy.

Stewart was the first person ever in her family to buy a home, and she was beyond ready to leave it. The heat never came on. The kitchen pipes froze. The electric bills were up to $400 a month in the winter from the space heaters. And the dining room wall resembled a gallery installation, with wet rot oozing down from a busted pipe upstairs.

When the decay started, not long after she moved in, Stewart called the mortgage company. She expected Argent to be responsible for the product she bought, just like her landlord once was. "They said it was on me to get it fixed!" she says incredulously. "I don't know what I'm paying the mortgage for." Hearing nothing back, she stopped paying. Argent went to Cuyahoga County Court that November and filed for foreclosure. Stewart had borrowed $85,000, and still owed $84,795.87.

If getting out of homeownership didn't take much effort, neither did getting in. Stewart put down $500 cash to purchase the beige four-bedroom just outside Euclid. She would get a whole house for less than she was paying in rent each month.

Almost no one in Cleveland puts money down to buy a home anymore. Sellers nearly always foot the bill, and since they're forbidden to pay a buyer directly, they turn to a proliferating array of nonprofits that lend the money to buyers on the sellers' behalf: Nehemiah, Ameridream, Liberty Gold, and local players too, like Buckeye and Ohio Mortgage.

Stewart got a $10,000 loan directly from the seller of the house, a handyman named Steve Dragmen. (Dragmen asserts that the funds were not for a down payment, but simply to qualify Stewart for the mortgage.) She certainly could use the help. Stewart made about $30,000 a year as a machine operator at a bakery. The house cost $100,000 -- more than double what Dragmen had bought it for three months earlier. After Dragmen put $20,000 into overhauling the bathrooms, the kitchen, the carpet, and the water heater, an appraisal company called American Dream green-lighted the selling price.

Dragmen sent Stewart to an Argent broker, who informed her that she didn't earn enough to qualify for an $85,000 mortgage. Did she have any other income? How about anyone else in her family? Stewart's mother was on Social Security disability, so the broker added "other income" of $693 a month to Stewart's application.

The application also notes that Stewart had $5,000 in her checking account. "Yeah, right," says Stewart. "I didn't even have a checking account at the time." What she did have, as noted on her application, was more than $23,000 in debt, including fees owed to Charday's parochial school, medical bills, credit cards, and her own student loan. Plus she still owed Dominion East Ohio Gas more than $4,000. That would explain why she couldn't get the heat turned on.

Two days before the house goes up for sale, Stewart lumbers around the cold and cluttered ground floor, her eyes red. "I wish I could just burn it down," she declares. The leak down the dining room wall has bloomed into a small waterfall. Stewart still has to pack the shower curtain and trash can and towels and toothbrush holder, all of them covered with tiny Coke bottles. The glazed ceramic vegetables in the kitchen will have to come down. Charday keeps pulling her toys out of boxes. "Daughter -- you unpacking stuff? We're packing stuff!" Stewart instructs her.

Following the sheriff's procedure, Argent will hire a moving company to photograph everything Stewart leaves behind and put the items in storage for 30 days. The movers will change the locks and pour antifreeze in the toilets. And they will put a notice on the door: THIS PROPERTY HAS BEEN SECURED AGAINST ENTRY BY UNAUTHORIZED PERSONS TO PREVENT POSSIBLE DAMAGE. It's the third time in 10 years the sheriff has auctioned 1430 Larchmont Avenue.

At Stewart's foreclosure sale, Argent is the only bidder. The auction ends in less than 30 seconds.