Continued
In January, Ms. Halterman stepped back in and made the last mortgage payment. Foreclosure began in May. September brought eviction.
Ms. Halterman says she wishes she had never taken out the first home-equity loan. "I felt like I needed it," she says. "In retrospect, I needed my a -- kicked."
Other loans backing the HSBC-issued security were souring, as well. As of November, 25% were foreclosed, in the foreclosure process or at least a month delinquent, Mr. Atteberry says. HSBC declined to comment.
Mr. Rybicki gave up his mortgage-banking license in September. He now works for a venture-capital firm.
"The banks have part of the blame," Mr. Rybicki says of the housing bubble. "I think we have part of the blame. We were part of the system. So does the consumer."
Wells Fargo, which serviced the West Hopi Street loan, boarded up the house and hauled away the debris. And this past Monday, the property sold for $18,000 to Daniel and Delia Arce, who live next door in a tidy brick rambler. After expenses, investors in the mortgage-backed security will probably divide up no more than $15,000 in proceeds.
A few weeks ago, Mr. Arce asked Mike Summers, a city code-enforcement officer, whether a permit was required to raze the blue house.
"Yes," Mr. Summers replied, "but all you need is the big, bad wolf to come out and huff and puff."
—Liz Rappaport contributed to this article.
Write to Michael M. Phillips at
michael.phillips@wsj.com