Research support was provided by the Investigative Fund of The Nation Institute.

George Mitchell’s wife, Lillian, took her last breath in the house she loved, on New Year’s Day 2006. “Right there in that spot,” says George, 77, nodding to the far end of his worn, floral-print couch. “I think the last words she spoke was my name.”

“Yup,” confirms his youngest daughter, Chandra Chavis. “I was trying to perform mouth-to-mouth resuscitation at the time.” She points out the living room window to the small, sloping front yard and drive. “There was no address on the house, so I had to stop doing that to get the ambulance to come in.” But Lillian’s heart had seized, and Chandra knows there’s not much she could have done anyway. She figures if even the trauma team at Atlanta’s century-old public hospital couldn’t revive her mom, she must have been long gone. “Nobody can bring you back if the Lord calls you,” concludes an older daughter, Gwen Russell.

It was Lillian’s tenacity that led the Mitchell family to Atlanta’s Westwood neighborhood, in 1968. “She was determined,” Chandra explains, “not to have her children in an apartment–I know the story; I’ve heard it a million times–so she found somebody, a real estate agent, and they came out and they looked in this neighborhood. I don’t know what brought them to this part of town, ’cause at the time they were living in Dixon Hills”–then an up-and-coming black neighborhood–“but she decided she wanted a house, and this is where she found it.”

“All I did was sign the paper,” says George with a shrug.

That made the Mitchells one of the first African-American families to move into Westwood. Atlanta has long been known as the “black Mecca,” a place where African-Americans have been able to claw up the socioeconomic ladder and plunge into America’s consumer culture. Nowhere is that striving more visible than in the massive subdivisions of large, new homes that Atlanta’s black bourgeoisie have erected, reaching far into the suburbs. But the process began generations ago in a cluster of inside-the-beltway neighborhoods wedged into the city’s southwestern corner, including Westwood. Today that area is reeling, having been one of the nation’s communities hardest hit by the one-two punch of subprime lending and home foreclosures. The Mitchells have not been spared. Like hundreds of thousands of Americans, they are scrambling to keep the house Lillian found for them.

Nearly 18,000 homes faced foreclosure in the Atlanta area during the first quarter of 2008, an almost 40 percent jump from the first quarter of 2007. In Fulton County, which encompasses most of the city’s core and is heavily African-American, one in 122 homes was in foreclosure in the first week of April. A digest of Atlanta’s March 2008 “foreclosure starts” was as thick as the phone book, and the Mitchells’ 30310 ZIP code topped the list.

The area boasts an old stock of quaint, midcentury houses painted in bright yellows and crisp blues, accented with quirky touches that now feel more haunting than homey. On block after block, as many homes sit vacant or bank-owned as not. Boarded-up windows lurk behind white-columned front porches, and the yards are slowly going to weeds and trash. On one block, eleven boarded-up houses line the street, making the area look like it’s been hit by a natural disaster.

But the disaster is depressingly man-made. And this neighborhood reveals a deeply troubling dimension of it, one that will echo long past the recovery everyone hopes will soon come: for black America, the “mortgage meltdown” looks less like a market hiccup than a massive strip mining of hard-won wealth, a devastating loss that will betray the promise of class mobility for tens of thousands of black families.

As the mortgage crisis unfolded, observers of all political stripes repeated a boilerplate line: the “affordability products” that have flooded the lending market in recent years–from subprime to interest-only loans–have done more good than bad by fueling a surge in black and Latino homeownership. But while minority homeownership may have grown in the short term, the long-term outlook promises quite the opposite, as southwest Atlanta painfully illustrates.

First-time homebuyers have originated less than a tenth of all subprime loans since 1998, according to a 2007 Center for Responsible Lending analysis. As recently as 2006, just over half of all subprime loans were refinances of existing home loans. The expected foreclosure toll from these loans will outpace the ownership gains by nearly a million families, the center estimates.

That’s particularly true in established black neighborhoods like Westwood, where banks and brokers targeted vulnerable longtime homeowners and lured them into needless and rapidly recurring mortgages they clearly couldn’t afford and from which they never stood to gain. More than half of all refinance loans made to African-Americans in 2006 were subprime, according to an analysis by the advocacy group ACORN. That’s nearly twice the rate among white borrowers. Among low-income black borrowers, 62 percent of refinance loans were subprime, more than twice the rate among low-income whites.

“It actually started in communities like Atlanta,” says Nikitra Bailey, a Center for Responsible Lending researcher who has studied the Southeastern US housing crisis. “A lot of our older African-Americans were house rich but cash poor. So lenders came up with these scams to siphon the wealth away.”

It’s a loss black America can scarcely afford, because black wealth has long been enormously dependent on home equity. In 1967, the year before the Mitchells bought their house, homes accounted for 67 percent of black wealth, compared with 40 percent of white wealth. The disparity has only grown, pushed by the turn-of-the-millennium stock market boom. Without counting home equity, black net worth in 2004 was just 1 percent of that for whites, according to research by New York University economics professor Edward Wolff.

This wealth gap makes the disaster unfolding in neighborhoods like Westwood all the more catastrophic. As the Mitchells sit in George’s cluttered living room, wending their way through their past, they bump against memories of family after family who are in quandaries just like theirs–friends and neighbors struggling to hold onto homes they bought decades ago. “It’s a crying shame,” Gwen rails. “People been living around here forever! I think it’s wrong,” she complains, throwing up her hands in resignation. “But what can I say?”

The Mitchells mark time by the particulars of their history. They know, for instance, that George retired from thirty years of delivering mail to his neighbors in 1985, because that’s when Chandra came back from Germany with her newborn son. And they know they moved into this house forty years ago, because that’s when Gwen had her child. “Yup, Kipper would have been 40 this year,” Gwen says, nodding for emphasis as she mentally links the house’s life span with that of her son, who died in 2000 in a car accident. “Forty years in this house right here.”

George doesn’t remember his white neighbors giving the family any trouble when they moved in, but they didn’t roll out the welcome mat either. He still laughs at one neighbor’s reaction when he and the realtor stopped in front of the guy’s house. “The dude, he broke out the house like somebody hit him with a hot poker! He was talking about how he built this house and he did it for his family and he didn’t want nobody in it. And all I did was look at the house. But I tell you, the next time I went through there it was some black ones in it– ’cause he was gone.” Before long, so were all of the Mitchells’ white neighbors.

George and Lillian took over a previous owner’s $16,000 mortgage for their 1,600-square-foot home. With two incomes, they easily managed the monthly note. Then and now, the house offered the family security and stability.

“I was 6,” Chandra proudly declares of the age at which she began living here. “My son grew up in this house, too,” she adds. They’ve all lived here at some point over those decades. George’s four kids and six grandchildren have spread out around the South–a son in Fayetteville, Georgia; a middle daughter in Birmingham, Alabama–but this has always been what Gwen calls the “home house.”

Gwen stays here three days a week, when she’s off from her job as a live-in nurse. Chandra and her husband own a home a few neighborhoods over. But her 20-year-old son, Marcus, lives here with his aunt and grandpa. Chandra frets that “the knucklehead” won’t get his life together and go to college or take real steps toward his dream of opening an auto-body shop. But she knows he’s got a roof over his head and, in time, will sort it out. “You can always come home to Momma and Daddy when times get tough,” Gwen says affectionately.

George and Lillian were lucky to get the house, because African-Americans were largely locked out of the massive mid-twentieth-century public-private effort to expand access to credit and homeownership.

America hasn’t always been a majority “ownership society,” as George W. Bush likes to call it. The nation’s first homeownership boom came after World War II, when the government used the Federal Housing Administration’s (FHA) mortgage insurance to lower the cost of buying. Banks extended credit lines to middle-class borrowers in ways that encouraged long-term ownership–thirty-year mortgages covering 80 percent to 90 percent of the buyer’s costs with interest rates of about 6 percent. By 1960, the American homeownership rate had shot up from less than half before the war to nearly 65 percent, where it remained until the modern housing market took off.

Black communities were excluded from this rising tide. The FHA’s underwriting manual guaranteed insurance for segregated white neighborhoods only, until a series of court cases between 1948 and 1953 struck down the rule. Even then, the policy changed in word alone: 98 percent of the 10 million homes federal money had backed by 1965 went to whites, and banks’ redlining of black neighborhoods went on for years thereafter. As a result, the black-white disparity in homeownership hasn’t dropped below 20 percentage points since 1940; it was at 25 percentage points in 2007.

The 1977 Community Reinvestment Act (CRA) aimed to end the lending bias in the housing market. The complex law boils down to a simple principle: anywhere a federally insured bank or thrift takes deposits, it must give out credit. The law also set up regular audits of the institutions’ lending practices to police compliance.

Today, when industry backers aren’t touting the good that subprime mortgages have done, they’re arguing that the CRA set the stage for the market’s current collapse by encouraging lending to “risky” borrowers. But subprime lending didn’t start with the demand that banks serve the community; it grew out of the removal of usury laws that governed how much banks could charge for their lending services. Having fought the CRA tooth and nail in the late ’70s, by 1980 the banks were pushing for regulatory changes that would allow them to profit from the requirement. Says the Center for Responsible Lending’s Nikitra Bailey, “It’s like once we got in the game, the rules changed.”

So did the loan products offered by banks. Subprime loans emerged in the 1980s and slowly multiplied, driven in part by the new deregulation and in part by an explosion of brokers and other unregulated lending entities–many of them subsidiaries of traditional, otherwise regulated banks. These products were supposed to be tools to firm up poor credit and bridge low-income borrowers to prime loans. For years, they remained a tiny, if troubling, share of overall lending, accounting for just 5 percent of all mortgage originations in 1994. The problems started when the housing market took off at the turn of the millennium, driven by historically low interest rates, skyrocketing sales prices and the resulting global rush to invest in the US mortgage market. Suddenly, subprime loans turned into trapdoors–increasingly exotic products through which lenders, desperate to feed the mortgage investment beast, lured people into needless debt. By 2004 subprime loans were 20 percent of home loans–and half of all home-purchase and refinance borrowers had one in 2006.

The Mitchells, for their part, started out OK. Guarded by Lillian’s caution, they leveraged their new house to get opportunities otherwise beyond their grasp. The Mitchells paid for the final two years of Chandra’s bachelor’s degree at Clark–one of Atlanta’s famed historically black colleges–with their first refinance, in 1981; her Clark sticker is still in the upstairs window. “I thought she needed an education,” George explains. “She wanted one. So I saw to it she had it.”

And for the next two decades, the Mitchells’ lending history remained a relatively quiet, measured affair–a few more mortgages on the home, all for less than $40,000. Then, in 2003, the deed record for their house suddenly erupts into a line of increasingly large refinance loans, falling one after another in quick succession.

It starts with a $68,000 loan in May 2003–that’s the one they made for the new siding. By that December, they’d already refinanced for $100,000. In December 2006, there’s another loan, with now-defunct NovaStar Mortgage, for just over $116,000. Two months later there’s a package of two more loans, totaling about $125,000 and owed to California-based IndyMac Bank. The IndyMac loan package is a classic subprime product–interest-only payments for five years, at a fixed rate of just over 6 percent, then adjusting upward to about 9 percent plus the principal.

“That is just not an appropriate loan product for someone who’s 76 years old and who’s on a fixed income,” says Atlanta Legal Aid Society attorney Sarah Bolling, who’s representing the Mitchells in their effort to keep their house. “The only calculation that would make this make sense is to say, ‘Well, we’ll give him a low rate and in five years he won’t be alive.’ But that’s pretty cynical.” Not that it mattered: George managed to pay the loan for only two months before falling behind. Within a year, he was in default.

It’s a familiar story in 30310. Not far away from the Mitchells, the Hoods are desperately trying to hold onto a house they bought in 1975. A retired couple living largely on Social Security, they owe $176,000 on a house that may be worth just over $100,000. A broker from Maryland had cold-called them and talked them into a series of refinances. Another senior citizen, Jennie McCaslin, bought her house in 1970. In 2005 a broker sold her a $67,000 rehab loan, then flipped her through a series of refinances that left her owing $102,000, with an adjustable interest rate that can reset as high as 17 percent. One of the loans was co-signed by a 21-year-old niece, another by a son who was in jail at the time. McCaslin is functionally illiterate.

The Mitchells, Hoods and McCaslins are the “risky” and “irresponsible” borrowers cited in press coverage and policy debates about the foreclosure crisis. For months, the Bush Administration’s mantra has been that whatever remedy Washington comes up with, it mustn’t let borrowers off the hook for making bad choices. “I believe most Americans want to protect homeowners who played by the rules. They don’t want to reward risky financial behavior,” Assistant Secretary for Housing Brian Montgomery told the House Financial Services Committee in April.

The Administration and industry lobbyists have buttressed this rhetoric with claims that large numbers of those facing foreclosure are merely “speculators.” “The strength of our economy relies on the willingness of people to take risks,” Mortgage Bankers Association chair-elect David Kittle told an April 16 House Financial Services subcommittee hearing, “but risk means one does not always win.”

It’s a stunning statement when considering just how much risky speculating lenders themselves have engaged in during the past decade. The vast majority of homes facing foreclosure are owner-occupied. Aggregate data on those homeowners is spotty at best, but consumer advocates insist they look a lot like George Mitchell–people shoved into large, needless loans so that lenders could profit from the fast-growing securities market.

Much has been written about the role of the byzantine derivatives trade in the housing market’s balloon and bust. Investment banks have been bundling pools of mortgages and selling them as securities since the mid-’80s. But when the housing market exploded in the early 2000s, those pools became immensely profitable. Banks started gobbling up mortgages from lenders, who in turn frantically cranked up their lending volume to cash in on the new demand. Brokers raked in money as banks offered incentives for them to close larger and larger loans. Investors worldwide poured cash into the profitable mortgage pools that formed.

If the securities market was the bonfire, borrowers were the kindling. Had lenders not sought out and made loans to people without regard to their ability to pay, the fire would have burned itself out long ago. Instead, when the supply of reliable borrowers was depleted, the subprime lending products that Reagan-era deregulation helped usher in kept the flames lapping. Undocumented loan applications, interest-only payment plans and teaser interest rates are all just the tools lenders used to forage for new borrowers. “The purpose of those products was to convince these people that they could get in,” says Legal Aid attorney Bill Brennan.

George Mitchell, who, his daughters believe, suffered at least two strokes between 2003 and shortly after his wife’s 2006 death, barely remembers taking out the February 2007 IndyMac loan that he’s now suffocating under. Asked to recount how and why he took out any of the refinances he’s made since his original 2003 siding loan, George furrows his brow and stares out from his thick gray beard in silence.

“Papa don’t remember,” a frustrated Gwen explains. She suspects he got calls from banks and brokers offering him new loans. “I’m almost sure,” she says, noting that the house phone rings incessantly with marketers asking for her father by first name, as if they’re old friends. “He orders things off TV. He doesn’t realize he orders it. The pimple stuff?” She shoots a disgusted look at her dad when recalling that absurd package’s arrival. “He says he didn’t order it, but it came.”

Despite their close role in George’s life, none of the Mitchell children knew about the recent loans until February 2007. That’s when George called Chandra and asked her to come by the house to witness him signing for one of the two loans in the IndyMac package. “I came over here with the intention of not signing the papers,” Chandra says, recounting the frenzied afternoon. But the IndyMac loan officer, who Chandra says was at the house for just fifteen minutes, convinced her otherwise. “She told me you could not cancel the loan.”

George explained to Chandra that he’d had trouble keeping up with that loan and with his credit cards since Lillian’s death, due to the loss of her $500 a month in Social Security. “I read through what I could understand,” Chandra says of the few minutes she was given to browse the IndyMac package. “It was really thick, and I don’t know legalese, especially when it comes to loans. The only question that I had for her was, Could he cancel it, honestly?” Having been persuaded he could not, Chandra signed as a witness and hoped for the best.

George’s signature is scrawled on the bottom of each of the loan’s densely packed pages, as well as those of his initial loan application. But when Legal Aid’s Sarah Bolling reads the application details back to him, he nearly leaps out of his recliner with shock. It lists his income as $4,725 a month. He collects $300 a month from Social Security and $1,400 a month from his Postal Service pension. Nothing in the loan file documents the inflated income claim–a practice known as “no doc” and “low doc” lending that has displaced the once-standard step of proving income to an underwriter.

The application also says George had nearly $8,000 in the bank at the time. “No way!” he gasps. “Ain’t never been that kind of money in there.” Again, nothing in the file documents the claim, and nothing about it raised flags for IndyMac’s underwriters. Nor did it matter to the underwriters that the application appraised the house at more than $135,000. “The tax assessor thinks it’s worth $73,000, and that’s on the public record,” says Bolling. “I mean, it might only be worth $70,000 at this point.”

Even without these whoppers, it should have been clear to the bank’s underwriters that George never stood to gain a thing from the loan–other than a larger, more dangerous debt burden. All but $361.74 of the $125,000 that didn’t go to pay off NovaStar went to IndyMac’s fees and closing costs. He nominally lowered his interest rate for a few years, but the loan value had ballooned so high–to more than double the original 2003 loan–that the interest rate was irrelevant. Whatever choices George made, the most dubious decision was IndyMac’s willingness to make such a plainly bad loan.

“He was in foreclosure the day he signed the papers,” says Legal Aid’s Bill Brennan. Brennan has been fighting predatory lending in Atlanta for three decades, and to his eye the current crisis has less to do with exploding interest rates than the fact that banks, eager to profit from the surging securities market, simply approved any loan that came in the door. “They ran out of legitimately eligible borrowers a long time ago,” he says.

The rapidity with which borrowers have fallen into foreclosure is telling. Georgia law requires lenders to publish foreclosure filings once a month, so Brennan’s research team culled through Fulton County’s 1,600 listings for last November. Three-quarters of the foreclosures were for loans made since 2005, half were made in 2006 and one in ten had been made that same year. That sort of turnover used to be remarkable. “Even a few years ago, it was unusual to see a foreclosure that occurred in less than two or three years,” Georgia Tech researcher Dan Immergluck told the Georgia business newsletter Daily Report. He added that he has not seen foreclosures turn over that fast in the fifteen years he’s been following the local market.

It’s also clear that banks and brokers targeted African-American neighborhoods when mining for these loans. The Dekalb County community development office likes to show two maps to illustrate the point. One map shows Atlanta neighborhoods with the densest populations of people of color who could benefit from CRA lending. They are clumped together in a butterfly, centered on the city’s south side. A nearly identical butterfly appears on the second map, which shows neighborhoods that had a foreclosure rate over 20 percent between the first quarters of 2000 and 2005.

“It used to be that you couldn’t get credit, but now I tell people to just stay away from it,” Brennan says. “You don’t want it. It’s toxic.”

After taking the IndyMac loan, George Mitchell kept the seriousness of his financial troubles to himself until last summer, when the kids were all home for the Fourth of July. He told them then that the gas company was about to shut off his service. “We found out when everything was behind and the hounds was at the door,” Chandra says.

He’d been paying the mortgage intermittently, but by the time he told his children about the problems he was at least two months behind. He’d also fallen even further behind on his already substantial credit card debt. The gas card had racked up. The water and light bills were past due as well.

“Once I paid the mortgage, there wasn’t enough to cover–” George starts to explain, but Chandra cuts him off. “Actually, there was.” She shares her mother’s discipline, and she chides George for not adapting to the situation his IndyMac loan put him in. “Holly Golightly here wanted to go out and do other things. But you don’t have money to do extra things now.”

Chandra’s frustration is understandable, because the crisis has affected more than just George’s finances. All of the kids are chipping in to cover the sprawling costs. Gwen pays the water bill. Chandra and her husband pick up the phone bill and keep everybody fed by cooking enough for both households–that way George can focus on his mortgage payments and credit card debt. “Sometimes it’s hard,” Chandra says, “but this is family. And you have to do what you have to do for family.”

Economists say this dynamic of wealth and resources flowing backward–from kids to parents–rather than forward is typical in black families, and an important part of what separates blacks and whites who, by other measures, are nominally of the same class. Researchers are hotly debating the details of what is expected to be a historically large intergenerational transfer of wealth in America over the coming decades. But one fact is clear: blacks won’t participate in it. In 2004, one in four whites reported having received an inheritance; fewer than one in ten blacks said the same, and the amount they got was, on average, half that of whites.

The foreclosure crisis makes the picture look bleaker still. Estimates vary on the amount of wealth lost, but they are all in the hundreds of billions of dollars. A United for a Fair Economy estimate in January put the wealth loss for people of color at between $164 billion and $213 billion, roughly half the nation’s overall loss.

State Senator Vincent Fort pads around the Georgia Capitol with the wan look of a man who knows where the bodies are buried. Fort, who represents the tract of Atlanta that’s been hardest hit by foreclosures, saw the crisis coming. He wrote and managed to pass a law that would have averted the whole mess–if financial industry lobbyists hadn’t flooded Georgia and got it repealed a year later. Now he’s relegated to the role of gadfly, resubmitting the prescient bill each session and getting nowhere. Sitting in his office after the close of this winter’s session, he rocks back and laughs at it all: “It’s like getting pickpocketed at eighty miles an hour.”

Fort’s bill passed in 2001, with the strong-arm help of Democratic Governor Roy Barnes [see Bobbi Murray, “Hunting the Predators,” July 15, 2002]. The law was meant to strengthen a 1994 Congressional measure, the Home Ownership and Equity Protection Act, which polices high-interest loans but has proven ineffective because its trigger is set too high. The Georgia law lowered the interest ceiling at which tougher rules kick in. And among other things, it forced lenders to demonstrate a “tangible net benefit” to the borrower for any refinancing of a home loan less than five years old.

The law was based on a 1999 North Carolina bill. Together, the two measures were the tip of what looked to be a building wave of state-level efforts to head off subprime lending–and the financial industry went all out to stop them. According to the Wall Street Journal, between 2002 and 2006 industry lobbyists poured tens of millions of dollars into state-level campaigns to prevent or undo subprime lending regulations.

Ameriquest, the now-defunct mortgage company that was one of the nation’s largest subprime lenders, led the fight in Georgia. It handed out tens of thousands in political donations, according to the Journal, and threatened to stop doing business in the state unless Senator Fort’s law was repealed. Standard & Poor chimed in, announcing that it wouldn’t offer ratings for any mortgage securities with Georgia subprime loans in them, citing liability concerns.

“What we had in 2002 and 2003 was the most powerful companies in the world focused on Georgia,” Fort says with a sigh. He relates how he was deluged from the moment he announced plans to write the bill, after hearing a presentation on subprime lending at a Department of Housing and Urban Development conference. He stood up and announced that he planned to address the problem in Georgia, and an industry lobbyist immediately approached him to offer “help.” “I guess I learned a lesson: don’t tell your enemy what you’re going to do.”

Within months of Standard & Poor’s announcement, the Georgia Legislature repealed Fort’s law and replaced it with one that removed the requirement that lenders show a tangible net benefit for refinance loans. The same process unfolded in New Jersey, where the Legislature passed a tough law in 2003. Lobbyists, led by Ameriquest, descended on the state. Standard & Poor repeated its refusal to rate securities with subprimes from New Jersey. And in 2004 the Legislature unanimously replaced the tough law with one that deleted the tangible-net-benefit rule.

“It’s useless,” Brennan says of the new Georgia law. “They would not have come back to Georgia if the 2001 bill had stayed in place. That was the purpose of the bill, to drive the predatory lenders out of the state.” Indeed, North Carolina, where the net-benefit law held up, is today one of the states least impacted by the foreclosure crisis.

As Washington gears up for its belated response, industry lobbyists are once again warning against regulating lenders’ behavior. During his April 16 House testimony, Mortgage Bankers Association’s David Kittle described at length his members’ voluntary efforts to work with borrowers to prevent foreclosure. “The key is to find solutions that help borrowers but do not violate the agreements with investors who now own the securities containing these loans,” he cautioned.

The Bush Administration has joined the industry in opposing any measure that would force lenders to restructure loans or write-down their values. Bipartisan bills in the House and the Senate would do just that by empowering bankruptcy judges to force loan modifications for borrowers facing foreclosure on mortgages larger than the market value of their homes. Neither bill has gained traction.

Meanwhile, Congressional Democrats and the Administration have agreed on using the Federal Housing Administration to spur voluntary loan restructuring. They disagree mightily on how far to go, however.

An Administration plan announced in early April would let select subprime borrowers who are behind on their payments refinance into an FHA-insured loan; for loans larger than a house is worth, lenders would have to write the principal down. The Administration predicts the plan will help 100,000 homeowners. In June the Senate reached a compromise for a competing Congressional plan–a version of which passed the House in May–that would offer the same deal but with larger write-downs and would be available to far more borrowers, an estimated 400,000. The White House threatened to veto it, citing its cost and added taxpayer liability.

The Senate deal had enough support to override a presidential veto. But more than 2 million loans were at least sixty days delinquent in April, according to data from the Hope Now program, set up by the banking industry to facilitate voluntary workouts of troubled loans. Which means Washington will ultimately have to revisit the question of how to save people’s homes, not to mention how to prevent new predation once this crisis passes.

Notably, Barack Obama has backed housing advocates’ primary demand: allow bankruptcy courts to modify loans. He’s also supporting a key part of the Senate plan, which would create a fund for local governments to buy foreclosed properties and thereby reverse the building glut of vacant, unsold housing. John McCain, meanwhile, has shifted his stance, initially echoing industry rhetoric about not aiding “irresponsible” borrowers, then unveiling a plan he said would help about 200,000 borrowers.

The Senate’s homebuying fund is key because, as the slow machinery of Washington grinds along, neighborhoods like Westwood are falling further and further into decay. The ugly reality is that banks can foreclose on properties, but they can’t resell them. With thousands of already overvalued homes up for sale, the market is flooded, further driving down property values. Banks, however, are hostage to the securities on which they gambled and cannot price the foreclosed homes at their actual value.

So the houses sit there, many with overgrown lawns, busted windows and piling trash. Squatters and drug dealers break in; scavengers mine them for copper and other valuable metals. Municipal tax bases drop, even as the vacant properties spawn crime and fires, which demand greater public service costs. “It’s a major drain on the community and its resources,” says Senator Fort.

The Atlanta Legal Aid Society is trying to slow the decay one house at a time. For senior borrowers like George Mitchell, Brennan’s team is betting on a strategy using a reverse mortgage. Under these complex deals, a lender gives an older borrower a loan for an agreed-upon percentage of the house’s appraised value–usually about 60 percent. The borrower never has to pay that loan, but it accrues interest until the borrower dies. At that point, whoever inherits the estate has twelve months to either pay the principal plus interest or turn the house over to the lender.

Legal Aid secures a reverse mortgage, then offers the money from it to the foreclosing bank as a settlement–along with a threatening letter outlining the ways they believe the borrower was preyed upon. The message is clear: take this much and call it even or deal with a messy lawsuit. It’s no universal solution, but as of January Brennan and Bolling had used it to save a couple dozen homes.

The Mitchells are hoping to join the list, but it’ll mean a seemingly endless struggle to stay ahead of foreclosure. The eldest daughter, Patricia Taylor, is approaching retirement, when she had planned to move back to Atlanta from Birmingham and take over the Westwood home. The family figures if it can get George a reverse mortgage and make a deal with IndyMac, Patricia can in turn get her own reverse mortgage to pay off George’s. That’ll be a victory, of course, but one born from a sobering reality: forty years after George and Lillian Mitchell achieved the hallmark of American socioeconomic stability, their children embark upon a decades-long hustle to rescue what should have been capital-building equity from the grasp of paralyzing debt.