SPECIAL REPORT

TODAY: Questionable home loan deals are contributing to record foreclosures. • Home schemes, broken dreams • High-interest loans jeopardized their home • Fliers and signs popping up on streets • Papers she can't read gave away her home • She owned, now rents family home of 100 years • Novice owner put faith in her former teacher • Lured into investing, left with shabby rentals MONDAY: West and East Price Hill are prime examples of how foreclosures contribute to a neighborhood's decline. ONLINE EXTRAS: Search Greater Cincinnati property records and use a mortgage calculator to see how much home you can afford

People with low incomes or poor credit histories still can buy houses. They typically obtain "subprime" loans that come with higher fees and interest rates than conventional loans.

"A subprime loan is not a bad loan," says George A. Gummer, executive vice president of the Ohio Mortgage Bankers Association. Subprime lending is a legitimate business that has benefited homeowners and communities alike, he says.

The term doesn't refer to the prime rate; it refers to the borrower's lower credit quality. Because the risk of default is higher, subprime borrowers pay more for their loans.

There are no limits on interest rates and fees in Ohio. Federal law requires lenders who charge fees exceeding 8 percent of a loan's value to warn borrowers about the potential of foreclosure.

According to the latest information available, the most active subprime home-purchase lenders in Greater Cincinnati in 2001 were First Franklin Financial Corp., Accredited Home Lenders Inc., NationsCredit Financial Services, The CIT Group and Beneficial Corp.

In October 2002, Beneficial Corp.'s parent, Household International, paid $484 million in restitution to home-loan borrowers nationwide following complaints about lending practices.

NationsCredit's subprime lending operations were closed in 2001 by its parent, Bank of America, because they weren't profitable enough.

Ken Alltucker and John Byczkowski