Consumer Affairs reports on Missouri. "When Sheila Smith got a look at what she thought was her dream home, she didn't hesitate to take it. Smith, a social services and business consultant in Independence, Missouri, and her family took the chance and signed the papers on the house in May 2000. It wasn't long before the dream became a nightmare for Smith and her family."

"Although Smith and her husband were 'viable citizens with good credit,' they were quickly steered into an expensive subprime loan with ballooning payments and hidden fees that they couldn't keep up with. Their home's builder was indicted and the mortgage broker was quickly revealed to be collaborating with the builder to, as Smith put it, 'unload crappy homes for pretty quick money.'"

"Trying to sell the home was fruitless, as they received conflicting appraisals due to all of the defects in its construction."

"Smith was able to use the confusing and ambiguous rules of the modern mortgage market to fight back, and convince lenders and judges alike to let her and her family keep their home -- at least for now."

"Nancy Seats, president of Homeowners Against Defective Dwellings, says that more homeowners should challenge foreclosures by lenders who can't prove they legitimately hold the loan, and that many innocent buyers are the victims of 'very unscrupulous activity' propagated by lenders and investors who are motivated by 'nothing but greed.'"

"'They knew [the market] was all going to collapse eventually,' Smith said. 'They said, 'Let's just make as much money on the front end as possible and not worry about the back end.'"

"Even Smith's hometown of Independence, a small city of 113,000, has been hit hard. 'I've seen homes that were bought for $1.7 million go back on the market at $680,000 to get them sold quick,' she said. 'In a row of ten homes, maybe one-third of them will have foreclosure signs out front.'"

The Plain Dealer from Ohio. "Foreclosure-tainted houses have caused home prices in Cleveland and many East Side suburbs to plummet in 2008 as banks and lenders unload their dam aged goods at rock-bottom prices."

"The median home sale price in the city of Cleveland has dropped an astonishing 75 percent compared with the first six months of last year - from $62,000 to $15,500."

"Nearly 59 percent of home loans made in Maple Heights during 2006 were subprime. That southeast suburb of modest bungalows has seen housing prices fall 67 percent for the first six months of this year."

"In Strongsville, only 16 percent of mortgage loans in 2006 were subprime. Home prices there have fallen just 4 percent."

"Helen Hertz, a Cleveland Heights-based real estate agent, said mortgage lending has returned to the place it was more than 20 years ago. That means buyers need to have a down payment and pay their closing costs out of their own pockets."

"The real estate market is not going to recover right away, Hertz said. 'I think it's going to take three to five years to reabsorb the inventory,' she said."

"Sheila Tomasi walked through the back door of the newly bought house as if stepping into a cave. Slowly. Warily. Ready to shriek. She was a long way from California, where she and her husband, Eric, buy and sell real estate."

"But she thinks they discovered a gold field in Cleveland, riches to be mined from boarded-up mysteries like this one."

"If you looked past the cracked plaster walls, the bathroom savagely stripped of plumbing -- which she was willing to do -- the little blue house at the edge of Slavic Village looked almost livable. The Tomasis bought it sight unseen for less than $3,000. A sign on the front lawn on Portage Street says it could be yours for $500 down, $300 a month. That's $25,000 in 15 years."

"Tomasi, a sun-kissed 39-year-old who knows how to surf, is one of the newest players in Cleveland's shell-shocked housing market. In a little more than a year, she and her husband, the principals behind TSE Properties LLC, have bought up dozens of impossibly cheap homes and resold many of them."

"The couple purchase foreclosed homes in bunches from banks. They make minimal repairs and resell the houses as handyman specials, offering a mortgage rate less than the neighborhood's going rent."

"'We're taking a risk, but our investment is limited,' Tomasi said. Meanwhile, her buyers, usually lifelong renters, become homeowners at 1940s prices."

"Cleveland Councilman Tony Brancatelli, whose ward surrounds Slavic Village, is not sure what to think.
Lacking a public program that uncrates boarded-up houses and puts them back on the market, he's supporting the Tomasis and a few other speculators like them."

"'It's a piece of a strategy,' Brancatelli said. 'I don't know if it's good yet. But you've seen my neighborhood. I'm not throwing away any idea. Can this be part of the fix?'"

"Eric Tomasi remains a mortgage broker in the market around the couple's hometown of San Luis Obispo, Calif. Two years ago, the couple leapt into the misery market, starting in Detroit. They bought their first foreclosed home in Cleveland last year."

"Eric Tomasi said the move to the distressed Midwest made business sense. 'It's hard to lose money when you're buying duplexes for $1,000,' he said."

Crain's Detroit Business from Michigan. "In addition to running his Warren-based realty company and serving as a national spokesman in the fight against mortgage fraud, Ralph Roberts also flips houses - he has bought and sold an estimated 2,000 foreclosed homes during his career."

"But Roberts has flipped only one so far in 2008; he invested about $110,000 in a house in Shelby Township and sold it for $190,000. 'But three years ago I would have sold it for $300,000,' said Roberts."

"Roberts said money can be made on a home at any price by following a simple formula: 'You have to buy below wholesale and sell for wholesale,' he said."

The Detroit Free Press from Michigan. "As more condo owners who need to move are stuck with properties they can't sell and foreclosure rates rise, many homeowner associations are hurting for the cash needed to maintain monthly services."

"Jon Sabo, who manages Highland Lakes Condos in Northville, says delinquencies are at 5% at the 700-unit complex. 'Because of oversupply, prices have been devastated,' said Sabo, who is also chapter executive director of the trade association for all Michigan homeowner, condo and property owner associations."

"The Highland Lakes property has 16 foreclosed properties, and while sales continue, they have done so at lower prices."

"At the peak of the real estate market, in August 2005, a lakefront 2-bedroom, 2-bath 1,400-square-foot condo at Highland Lakes sold for $220,000. The same unit now sells for $140,000."

"Jeff Axt of Bloomfield Hills was unable to sell two condos when he married and moved into a house in November 2007. He rents one in Royal Oak to a renter he advertised for and one in Warren to his dad."

"Axt ran for the board of the Lancaster Woods Condominium Association three years ago, as he began to question rising association fees that were not accompanied by more services. 'We were told year after year that the association needed more money, and it was never enough,' said Axt."

"Foreclosures are a concern because banks typically do not make an attempt to get association dues on a payment schedule, he said. When the condo is resold, the back fees have to be paid and the banks often have to deal with them at closing, he added. 'You're way down low on the food chain in terms of getting paid,' he said."

The Star Tribune in Minnesota. "It's been a tough year for Americans. Home prices have dropped and the unemployment rate is up. No wonder that consumer confidence, according a widely watched survey released Tuesday, is as low as it was in 1967."

"'I'm sliding,' 61-year-old Floyd Ohlson said of his household net worth. Ohlson, who works part-time, had hoped to sell his Rosemount, Minn., home this year to lower his costs and help finance his retirement. He's had to scratch those plans now and continue working."

"One measure, the so-called misery index, confirms that people are feeling more miserable today, but not nearly as miserable as their parents or grandparents have felt in the past. The index, calculated by adding the unemployment rate to the inflation rate, was created in the 1960s and cited often during the stagflation days of the 1970s and 1980s as a simple and catchy assessment of the economy's well-being."

"Add May's 5.5 percent unemployment rate to the May inflation rate of 4.18 percent - and the misery index today is 9.68 percent. That's the highest it's been since September 2005, but nowhere near the all-time high of 21.98 in the summer of 1980, when the nation faced double-digit inflation and an unemployment rate of almost 12 percent."

"The era from 1994 to 2000 brought low unemployment, inflation and energy prices, rising wages and soaring stock markets and home values. Many Americans buoyed their lifestyle with home equity and access to credit."

"'We got mesmerized by the increase in asset values,' said David Joy, chief market strategist for RiverSource Investments in Minneapolis."

"The collapse of the housing market has provided stark evidence that consumer lifestyles and the American economy may have been living on borrowed time and borrowed money."

"Adrienne Garcia thinks it's about time for a behavior shift. 'Everyone's going to have to adjust their way of living,' said the 28-year-old St. Louis Park, Minn., resident. 'If you think of our generation, we've always had it good. People need to get back to reality because it's been way too hunky-dory for a while.'"