From East Toledo, a human face on collateral damage of loan crisis

Tom s house, owned by a landlord who has declared bankruptcy.

The subprime-lending mess and the meltdown in home prices have affected millions of people.

About 1.3 million homes were in foreclosure at the end of the first quarter, and one study found that 9 percent of all mortgages, affecting 5 million loans, are troubled. Another study forecast that one out of every 33 home-

owners could face foreclosure over the next two years.

Millions of homes are valued at substantially less than they were a year or two ago, and some experts say values could tumble a further 10 or 15 percent. Builders, developers, and banks are hurting too. And many nonhousing businesses are sharing the pain because financial institutions are tightening their requirements on all loans.

Among those suffering from the housing crisis are consumers who never borrowed a nickel of subprime money and who don't have a mortgage of any type.

For example, Tom, a 74-year-old retiree who rents a four-room house in East Toledo. He asked not to be fully identified.

Tom s house, owned by a landlord who has declared bankruptcy.

Three weeks ago, he got a letter from his landlord saying: "Due to circumstances beyond my control, I have been forced to file bankruptcy I will no longer be performing duties as your landlord. The lending institution that is servicing the mortgage for your property will contact you with further details and instructions."

Tom s house, owned by a landlord who has declared bankruptcy.

But that hasn't happened.

Tom, whose income is from Social Security and a veteran's disability pension, escrowed his $425 rent money for June.

He visited Toledo's water department to make sure his water won't be shut off. He put in an application with the Lucas Metropolitan Housing Authority in case he is forced to move. And he is looking daily for other homes or apartments nearby.

He has fewer options than some tenants: He doesn't drive and has difficulty walking. His entire social life, his friends, and his helpers, are in East Toledo. And he doesn't want a repeat of what happened two years ago, when he was forced to move from a nearby house because of defects, including a furnace that didn't work.

To compound his problem, he believed that he had found in his current house a home for the next five to 10 years, so he bought a $500 shed for his lawnmower and garden tools, and he financed a washer and dryer.

His house is a perfect example of how the subprime-lending mess occurred in the first place. The 111-year-old structure was sold two years ago for $8,800 and was sold again last year for $45,000 but is valued by the Lucas County Auditor's office at $25,000. The current owner bought several other East Toledo properties in recent years.

"I think he just overextended himself," said Tom, who admits he knows very little about the subprime debacle, or mortgages in general. But he does think a lot of Americans can't afford the houses they live in, because of the higher costs of everything from groceries to gasoline.

He has called several area agencies but so far hasn't received much useful advice. "Frankly, I don't know what to do," he said.

Perhaps it's no consolation to Tom, but we're all affected ultimately by the fallout from the housing crisis. When it's finally over, a year or two from now, we can only hope lending rules have been changed to make sure this doesn't happen again.

Homer Brickey is The Blade's senior business writer.

Contact him at:

homerbrickey@theblade.com

or 419-724-6129.