( AFP )- The desperation of scores of Americans evicted from their homes and denied standard credit lines has given birth to a new market: developers who make a hefty profit reselling foreclosed homes to the poor.
Retiree Georgina Wilborn , 70, and her daughter Ola , a 45-year-old homemaker, agreed to pay 400 dollars a month for the next 15 years to buy their home back from the developer who snapped it up at auction.
Their modest two-bedroom house in the suburbs of Cleveland, Ohio was seized in 2006 because the women could no longer keep up with mortgage payments.
Texas-based Econohomes bought it for 7,875 dollars in September, and resold it to the Wilborns for 34,000 dollars.
When they bought the house in 2003 for 44,000 dollars, the Wilborns were paying 470 dollars a month to a bank which gave them an adjustable rate mortgage without showing much concern for their ability to cover the costs when rates went up.
Blacklisted by the banks, and desperate to hang onto their American Dream, they were forced to turn to companies like Econohomes , which are buying abandoned houses by the handful in cities like Cleveland.
The midwestern city has become the poster child of the subprime crisis in a country where some 2.1 million borrowers are behind on their mortgage payments.
"They sell to people who are desperate for housing ... people close to being homeless," said Judge Raymond Pianka , who is helping the city investigate this latest development in the subprime crisis.
"They created the sub- subprime market," real estate lawyer Willie Hines told AFP.
"They buy foreclosed homes by dozens, often for just a few thousand dollars apiece. They resell them to low-income buyers who would have trouble qualifying for bank mortgages."
Banks and other mortgage lenders generally sell foreclosed houses at about half their value, according to a county audit. Some are dumped for between 1,000 and 1,500 dollars.
But a representative for Econohomes said his company is anything but predatory or amoral. Instead, they are providing homes to people who could never otherwise afford them, said spokesman Craig Miller.
"We buy property at such a deep discount we are able to sell it to people who are economically disadvantaged at very attractive terms," he said in a telephone interview.
George O'Donnell just took out a mortgage with Econohomes to buy a one-bedroom home with no hot water and walls oozing with damp.
He is paying 275 dollars a month: 75 dollars less than he had been paying for a brand new, two-bedroom house a street away that was seized by Deutsche Bank after he fell behind on his payments.
"I know I should not have signed another loan, but I own my home," he said in an interview. "That's very important for me."
Active in the area since July 2007, Econohomes already holds more than 200 homes, while Destiny Ventures, the first such company to enter the region holds 3,271.
"They say they are well-intentioned, very good businesspeople -- why don't they renovate the homes? The strapped owners could flee when repair bills mount," judge Pianka said in an interview.
Pianka denounced the loose lending rules and lack of down payment requirements, problems which characterized the subprime market.
"Are we just continuing to churn the same problem?"