MAPLE HEIGHTS, Ohio: Tammi and Charles Eggleston never took out a risky mortgage, never borrowed more than they could afford and never missed a monthly payment on their neat, three-bedroom colonial home in the Cleveland suburbs. But that has not prevented them from getting caught in the undertow of the subprime mortgage mess now submerging this town.
Over the last 18 months, the Egglestons have watched one house after another on their street, Gardenview Drive, end up foreclosed and vacant.
Although lawns are still tidy and empty homes are not boarded up and stripped as they are in inner-city Cleveland, the Egglestons say Maple Heights no longer feels safe after dark.
Nor do they have the confidence they had when they moved in a decade ago that this is the ideal place to raise their 6-year-old twin girls, Sydney and Shelby. So, in May 2006, they put their home on the market in order to move closer to Tammi Eggleston's parents in another middle-class Cleveland suburb, Richmond Heights.
They have had no takers. Although they lowered the asking price to $99,000 from $109,000, no one has even come to look at it in more than six weeks.
"My heart panics every time I drive down the street and I see another for-sale sign," she says, pointing past the placards in front of her porch to others that dot surrounding yards like lawn furniture. "Some people on the street couldn't pay, so they just left. The competition to sell is just ridiculous."
It is a scene being repeated in cities and towns across America as loans that were made to borrowers with little or no credit history, many of whom could not even afford a down payment, fail in ever-growing numbers.
What was once a problem confined mostly to economically struggling areas is quickly becoming a national phenomenon. Last year, there were 1.2 million foreclosure filings in the United States, up 42 percent from 2005, according to RealtyTrac, a firm that analyzes such data.
At current rates so far this year, RealtyTrac expects foreclosure filings to hit two million in 2007, or roughly one per 62 American households - a rate approaching heights not seen since the Great Depression.
Analysts also say that the fallout from mortgages gone bad is spreading well beyond borrowers now in default. It has begun to engulf middle-class communities like Maple Heights, where nearly 10 percent of the houses - or 910 properties - have been seized by banks in the last two years.
And it foreshadows what could lie in store if mortgage holders default on what the Federal Reserve conservatively estimates to be $100 billion overall in risky subprime loans. Many of these loans were made in 2005 and early 2006, when standards were at their most lax and cities like this Cleveland suburb were blanketed with aggressive pitches from mortgage providers.
"I don't think we've hit bottom," says Michael Ciaravino, the mayor of Maple Heights. "My fear is that foreclosure rates could go to double where they are today."
In terms of the subprime mortgage meltdown, Ohio has been among the hardest-hit states, according to the Mortgage Bankers Association. In Cuyahoga County, which includes Cleveland and surrounding suburbs, roughly 30 percent of subprime mortgages are either delinquent or in foreclosure, says Jim Rokakis, the county treasurer.
But this leafy community of bungalows and small family homes built after World War II could be described as its epicenter. Already, Maple Heights, with a population of 27,000, ranks No. 1 in Cuyahoga County in foreclosures per capita, according to Policy Matters Ohio, a nonprofit research group. Ranked by ZIP code, the number of foreclosures puts Maple Heights in the top one-half of 1 percent nationally, RealtyTrac says.
Ciaravino has already had to shut his town's two swimming pools, cut the ranks of police officers and firefighters and eliminate services like free plowing for senior citizens with snow-covered driveways.
With so many houses vacant, says Michael Slocum, the finance director of Maple Heights, "it puts a big question mark out there; historical collection patterns for taxes are becoming less reliable."
In fact, when the town made its annual assessment on homes for garbage collection last month, receipts came in 15 percent below projections, forcing a 50 percent rate increase.
For a mayor presiding over a town in crisis, Ciaravino does not seem angry, but beneath an affable exterior is barely concealed frustration that the danger of subprime debt became a national issue only after Wall Street began to wake up to the threat this summer.
"We've been warning of problems for years," he says. "I'm just a small-town mayor. Where was the foresight?"