The Chicago Tribune reports from Illinois. "Every evening, Pat Wendelken goes online and peeks at the posted mortgage interest rates. She winces at what she sees. 'I watch the rates going up every week,' said Wendelken, who must decide soon the best way to finance a home she and her husband are building in Elgin. 'I'm wondering where they're going to go.'"

"'I don't think consumers are aware of what's happening,' said Dan Green, a loan officer in Chicago. 'It's just starting to become front-page news. Forty-five days ago, I was quoting 5.8 percent to people, and now I'm saying 6.6 percent.'"

"'They don't seem to be really moved by the fact that rates are going up. They figure that rates will come down again,' said Oak Park agent Norma Rixter. 'And the inventory [of homes for sale] is so high, they figure the homes will still be here.'"

"And at lower prices: Rixter and others say that after a disappointing spring season, sales have picked up somewhat in the past few weeks, though that's likely due more to reduced asking prices inspiring buyers to make offers."

"'We've had 12 properties go under contract in the past week, and that's double what we were seeing recently,' Rixter said. 'But 20 houses came on the market at the same time.'"

"Naperville appraiser Chip Wagner, whose firm compiles a monthly analysis of home sales around the Chicago region, said about 44,000 single-family homes were for sale here last July. It was about the same April 1. But on June 13, there were more than 58,000."

"'What really jumps out at me from the previous quarter is that we've seen the average listing price drop almost $27,000 in the region,' Wagner said. 'At the same time, we see all these new listings. That's a scary number to me, 58,000 is a 9.2-month supply [of homes for sale]. I was taken aback when I saw it.'"

"In Chicago, developer R. Donahue Peebles, CEO of Coral Gables, Fla.-based Peebles Corp., dropped a $250 million mixed-use hotel project he was planning downtown. It was to have a hotel, retail, furnished corporate apartments and residential condominiums."

"In the past two months, 'The cost of money and the amount of leverage available for the deal started to work against us,' said Peebles."

"Peebles could only obtain a loan for 75 percent of the total development cost and interest rates are up almost 1 percent since he started planning last winter. Instead of only needing $25 million in equity on hand he now needed $62.5 million. Meanwhile, his profit margin would have been cut from about $50 million to about $36 million, he said."

"Coupled with a less than prime location and a competitive luxury condominium market here, Peebles said, 'We saw enhanced risk and depressed return.'"

"'The last time I saw a collapse in the real estate markets like this was in 1998,' said Dennis Trimarchi, CEO of Trimarchi Management, a real estate investment firm, adding that he believes the market will 'work itself out in six to nine months.'"

From USA Today. "Home foreclosures in Minneapolis doubled in 2006 and are on pace to double again this year. The number of vacant buildings is rising in working-class neighborhoods with high levels of subprime loans. Some families are simply walking away from once-secure homes."

"'People are upside down; they owe more than their house is worth,' says Glennis Ter Wisscha, deputy director of Neighborhood Housing Services of Minneapolis. Homeowners 'can make it at the (initial) teaser rate, but the adjusted rate is going to go up $400, $800, $1,000 a month.'"

"'This isn't about the economy; it was a preventable problem, and that's what makes me so angry,' says Prentiss Cox, associate law professor at the University of Minnesota. Noting foreclosures have risen even as the state's unemployment has fallen, he blames the problem on bad loans and bad regulation."

"Dominic Tizzano, a single father of four in Willoughby, Ohio, is struggling to stave off foreclosure. Tizzano took out a subprime mortgage several years ago using a '2/28' loan, on which interest rates adjust after two years, and every six months thereafter, up to a cap."

"His lender says he can't refinance into a fixed-rate loan until he clocks a year of on-time payments, a big task, because his monthly bill has jumped from $982 to $1,248, and he's still not near his 14% rate ceiling."

"'I wasn't a genius at it at first; I kind of got forced into doing this,' says Tizzano."

"Homeownership is 'an American dream, but it's also (become) an American right. This has led to wrong on both sides,' says Lou Tisler, executive director of the Neighborhood Housing Services of Greater Cleveland."

"'They can walk out, look at an (ad), make a call and be in a house in 30 days,' Tisler says. 'We see them again in six months, when they're in way over their heads.'"

From Minnesota Public Radio. "When Al Ynegis bought a house in Apple Valley three years ago, he knew what he was getting into...sort of. Ynegis says he knowingly signed up for an adjustable-rate mortgage, which would make his mortgage payments increase over time."

"'But I didn't know it was going to adjust this much,' he says now."

"Ynegis started out paying about $1,645 a month. But in three years, his mortgage payments have climbed to $2,500 a month. That's a figure he can barely afford."

"'I've seen four clients today, and everyone is losing their home. So it's 100 percent today,' says bankruptcy attorney Barbara May. She practices in Roseville and is known as a 'fixer;' she only sees clients who have been turned down by two other bankruptcy attorneys."

"A lot of her clients' problems stem from having an adjustable rate mortgage they can't afford. 'I haven't had a case this year where someone wasn't in trouble in their mortgage,' May says."

"Bankruptcy can only do so much for people facing a foreclosure situation. May says people are always coming into her office asking, 'How can I save my house,' or 'What bankruptcy can I file?'"

"But those clients often mistakenly believe a bankruptcy attorney will help them magically afford their homes."

"'They can't file a bankruptcy to generate money,' May says. If you file Chapter 13 bankruptcy before you reach the point of a sheriff's sale, where the lender buys back the mortgage, you can work out a plan to repay back payments on the house."

"So, if you're $10,000 in arrears, you can arrange to pay off that sum over five years' time. But 'Nobody does, nobody does, because what happens is people in this position never follow through with their commitments,' according to Mike Aymar, a local mortgage broker who's seeing a growing number of customers facing bankruptcy and foreclosure at once."