The Journal Gazette reports from Indiana. "Builders received nearly 37 percent fewer Allen County home construction permits last month than August 2006, according to the Home Builders Association of Fort Wayne. Media stories about the mortgage crisis and increasing foreclosures are making potential buyers skittish, said Jim Lancia, president of Lancia Homes. Lancia Homes hopes sales will rebound this month and in October, Lancia said. Otherwise, it might be a long winter for homebuilders."

"'We’re braced for anything though,' he said, 'whatever happens.'"

The Indystar. "With home foreclosures near record highs in the Indianapolis area, businesses like Indy REO that cater to the distressed property market are bustling."

"Foreclosures are so prevalent that they make up one in five home sales in the metro area. Sales happen when lenders take title to houses after the owners fail to keep up with the mortgage payments."

"In many Indianapolis residential areas you can count on 50 recent foreclosures within a one-mile radius, estimates Seth Payton, an urban policy analyst at Indiana University- Purdue University Indianapolis."

"'There are deals in every neighborhood. The market's flooded with 'em. It's bad for banks but good for...people like me,' says Michael A. Scott of Southport, who has bought three foreclosed houses this year."

The Daily Herald from Illinois. "During 2005 and 2006, more than 30,000 people settled into homes that today stand where corn fields once did in Kane County towns. Yet mounting signs of a suburban housing slump also urge caution."

"Aggravated by an increase of homes on the market, flat or falling prices and higher foreclosure rates, homeowners continued to buy and have faith in their investments across the Chicago region. At least, they did last year."

"Median home values reported in suburban counties inched higher last year, posting anywhere from a 3.8 percent to a 13 percent increase from 2005, according to the Census Bureau's American Community Survey."

"Such confidence, a year delayed and by definition, subjective, counters evidence of a real estate rut that emerged in 2006 and could persist through 2008."

"Appreciation among home values appears to be slowing, a trend too new to register with census research yet too evident to ignore, experts said. 'The state we're in is something most Realtors, myself included, have never experienced,' said Mike Boraca, a 20-year market veteran. 'The data will be radically different the next time it comes out.'"

"Consider this: Boraca's office listed 217 properties in August. It had 38 showings during the entire month, down dramatically from the two or three showings a single listing typically draws in a month."

The Capital Times from Wisconsin. "UW-Madison economist Morris Davis doesn't want to become known as the most bearish real estate pundit out there. But considering past housing slumps and the depth of the current crisis, Davis isn't looking for any recovery for at least another three years."

"'Normally these bust periods last about four years and we're only one year into this one,' he says."

"Unfortunately, says Davis, things will likely get a lot worse before they get any better. That means prices will keeping falling, new construction will slow to a crawl and more people are going to lose their homes -- and their jobs."

"UW's Davis says it's important to realize that extending credit to poor people is central in helping everyone realize the American dream of home ownership. 'There is nothing wrong with (subprime) loans as long as home values increase,' Davis says. 'The problem comes when values are falling like they are now.'"

The Journal Sentinel from Wisconsin. "Milwaukee-based ForeclosuresWI.com reported 2,064 new foreclosure filings in August - the highest single month in its five years of operation."

"August's influx of new cases pushed year-to-date foreclosure filings in the Badger State to 12,955, a 27% surge from the 10,229 posted in the first eight months of 2006. Last year's volume, in turn, was 34% higher than 2005's."

"What's happening here, to a greater or lesser extent, spans the nation, said Perfecto Bobadilla, chief operating officer of American Mortgage Educators Inc. in Seattle."

"'The reason we have this catastrophe today - irresponsible lending. These lenders were overzealous to the point of institutionalized criminality,' Bobadilla said. 'It's the lenders' fault, and the federal government's fault for not stopping them and of course the borrowers, who always have responsibility, too.'"

"Metro Milwaukee's housing market in August was down a little on resales, down a lot on new construction."

"Many customers are unwilling to bankroll a new house before snagging a buyer for their home, said Matt Moroney, executive director of Metropolitan Builders Association."

"Home builders have faced a glut of unsold homes since the abrupt end of the nation's heady 2001-2005 housing boom. Speculators who feverishly bought up properties during the boom abruptly departed, leaving unwanted holdings behind. Meanwhile, buyers grew skittish and postponed decisions in case prices dropped."

"Two unmourned absences in today's market are speculative building and quick but costly subprime loans, said high-end builder Pete Feichtmeier, president of Colby Construction Co. Inc. in Delafield. 'Those deals are gone,' the builder said, 'and probably should be gone.'"

The Pioneer Press from Minnesota. "Katherine McCollum already had a full-time job, but the St. Paul mother of two had to pick up a weekend gig cleaning office buildings to make ends meet."

"McCollum and her husband both work seven days a week now, tapping family to babysit, as they struggle to manage the $340 added to their monthly house payment since their adjustable rate mortgage first jumped last spring."

"And the mortgage, now $1,343, isn't done switching interest rates yet. 'We're struggling,' said McCollum. 'We're just staying above water. It's bad.'"

"The local stakes are high. LoanPerformance estimates that roughly 19 percent of mortgages in the 13-county Twin Cities are ARMs, and that about 29,000 of them are hitting their first reset date in the second half of this year, with another 20,000 resetting in the first half of 2008."

"'The pig is going to go through the python the second half of this year,' said Robert Visini, a LoanPerformance VP."

"Shellie Rowe, site manager at the East Side Family Center sums up her expectations for coming months in a word: 'Pandemonium.'"

"Like North Minneapolis, parts of St. Paul's East Side have been slammed hard by foreclosure activity, as has Frogtown."

"Darryl Dahlheimer, program manager at Lutheran Social Services Financial Counseling in Minneapolis, said he's bracing for years of fallout. 'We're not talking about a bad storm to weather out, we're talking about complete neighborhoods potentially being gutted out with foreclosures,' Dahlheimer said. 'Whether it's Richfield or Windom, you're still talking this problem.'"

"Minnesota has already hit its own record, with 1.57 percent of outstanding mortgages - or more than 14,000 loans - now in some stage of foreclosure. That's the highest since the Mortgage Bankers Association started its current delinquency survey in 1979."

"McCollum said she and her husband didn't fully understand how their mortgage worked. They refinanced in 2005 to consolidate debt, she said, and didn't realize the loan would be an ARM until they sat down to sign the paperwork."

"She blamed her mortgage broker for misleading them about the loan's terms. The broker assured them they could refinance again before their interest rate changed, McCollum said."

"They haven't fallen behind on their mortgage, yet. She expects the mortgage will squeeze them even harder in December, when the current 8.5 percent interest rate adjusts to 9.5 percent. Their rate will continue climbing, she said, until it maxes out at 12 percent."

"'We have to refinance before then,' said Katherine McCollum. 'We'd end up losing our home.'"