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TOM CRANN: It's All Things Considered from Minnesota Public Radio news. I'm Tom Crann. Tomorrow, a Minneapolis woman is scheduled to lose her home. The bank says it is foreclosing on Faith Burns because she's fallen behind on her monthly payments. Burns says, that's not so. The fallout from the mortgage meltdown is vast every situation is different. But in general, the picture is this-- a fourth of the country's home mortgages are risky subprime loans.

Many of the borrowers have a troubled credit history, and the subprime loans are expensive. About 1/5 of the subprime borrowers are having problems making payments. Already thousands of homes stand vacant because people who fell behind have been foreclosed on by banks or have walked away. Experts say it will be several more years before the effects of the meltdown subside. The numbers are daunting, almost numbing. Last year in Minneapolis, 2,875 homes were foreclosed.

Already this year, it's 678. We wanted to understand the meltdown through a smaller lens. So we traced the path of Faith Burns' mortgage and found that it leads all the way to Wall Street. Burns doesn't know most of the people who had a hand in her financial unraveling. American Radioworks Producer Sasha Aslanian and Minnesota Public Radio Reporter Dan Olsen set out to find them. Dan Olson has our story from 35th Street to Wall Street.

DAN OLSEN: Dan Olsen.

FAITH BURNS: Dan.

DAN OLSEN: Nice to see you.

FAITH BURNS: Same here.

DAN OLSEN: We meet Faith Burns at her home in the Lyndale neighborhood of South Minneapolis. Her 1 and 1/2 story house was built in 1904, and a real estate agent Mike brag about its hardwood floors and original woodwork. Burns lives here with her children, two teens and one adult.

FAITH BURNS: We just painted the kitchen. We actually painted the whole house.

DAN OLSEN: She bought the property 13 years ago when her children were small from project for pride in living, a nonprofit group that helps low-income people become homeowners. Burns paid $31,500 for it. Home ownership gave her a roof over her head and a way to build wealth for her family. It's a critical rung on America's ladder of opportunity.

FAITH BURNS: We have not gotten to the basement yet. But that's where I actually did most of my business.

DAN OLSEN: Ironically, Burns ran a business boarding up abandoned properties.

FAITH BURNS: So we would get phone calls for the police 24 hours a day. They tell us they put someone out, and we have to go board it up.

DAN OLSEN: Now Burns hopes that won't happen to her house. Burns says her troubles began when her clients paid her late. She owed money to the IRS. A bank had turned her down for a business loan.

FAITH BURNS: And so what was the next thing that you could do and still run your business? And that was the thing, your home. And a lot of minority has home and they did the ReFi.

DAN OLSEN: The ReFi was a refinance. She could get cash out of her home to pay bills. In 2004, home values were soaring. Burns says she was getting calls and offers to refinance all the time.

FAITH BURNS: I actually was introduced to this gentleman who said that he can get a ReFi for me, and that was it at that time.

DAN OLSEN: Are you comfortable saying the individual's nam?

FAITH BURNS: I don't mind. His name was Louis Bedford-- or Belfrey. I'm sorry Belfrey.

DAN OLSEN: The man's name we learned later is Louis Belfrey. He's the first stop along the way in Faith Burns's mortgage money trail. Louis Belfrey was one of the callers a cold caller, ringing one person after another with his pitch. He hid a hot lead with Faith Burns-- not once, but twice. She refinanced through him in 2004 and again in 2005. We find Belfrey living in a townhouse in New Hope.

LOUIS BELFREY: I worked as a cold caller a few years ago.

DAN OLSEN: What does the cold caller do?

LOUIS BELFREY: Cold caller is like a telemarketing. They call and see if people want to buy a home or finance a home or something like that.

DAN OLSEN: Louis Belfrey says he's out of the mortgage cold calling business. He says he does house painting now. When Faith Burns gave us his name, we made repeated calls that went unreturned. We visited his previous residences. When we found him in New Hope, he was surprised, even wary, but willing to talk for a few minutes. In the big bubble of the real estate there, when things were still heading up, was that a pretty good line of work?

LOUIS BELFREY: No, it wasn't nothing-- the ones making the money was like the brokers. Yeah, and that's pretty much the people making the money.

SPEAKER 1: How much would you get for turning over that?

LOUIS BELFREY: $200.

DAN OLSEN: And then the broker would go in and do the deal.

LOUIS BELFREY: Yeah, yeah.

DAN OLSEN: What kind of money would a broker make on a deal?

LOUIS BELFREY: I don't know. They make-- I don't know. It varies. I guess, $3,00 $4,000, or something like.

DAN OLSEN: In fact, the documents show Faith Burns paid far more than $4,000 to refinance her house. There's a name of an individual come to mind who you passed along the leads to?

LOUIS BELFREY: Well, it was one guy. I know they called him Rocky. Yeah.

DAN OLSEN: Rocky is Reginald Rocky Foster. He wasn't home on a visit to his house in Apple Valley. Calls to him went unreturned.

SPEAKER 2: Rocky Foster.

DAN OLSEN: Rocky Foster owned a mortgage company called Unlimited Funding Corporation. The office was in Bloomington. It's empty now.

TIM EIDE: They had this whole space. As you can see, it's been redecorated now.

DAN OLSEN: Tim Eide is the building owner who rented space to Unlimited Funding from 2003 until earlier this year. Eide remembers Rocky Foster as a likable fellow, the life of a party.

TIM EIDE: He's a salesman. I think car sales in particular is his calling in life. I liked Rocky and really was hoping that he would make it.

DAN OLSEN: Unlimited Funding was one of quite a few mortgage companies renting space from Eide in the boom times a few years ago.

TIM EIDE: Boy, even at the time, I was really nervous about some of the mortgage companies. They just didn't feel good to me. But we were so desperate.

DAN OLSEN: Eide felt Unlimited Funding was one of the better companies. Rocky Foster kept current on his rent, and Eide heard about satisfied customers like the manager at nearby Taco Bell.

TIM EIDE: I could see the niche they had in the minority mortgage market that had sometimes been overlooked by others.

DAN OLSEN: There's no way to know how profitable the business was, but Faith Burns paid a very large fee, more than $13,500 on a $199,000 mortgage. The fees totaled nearly 7%, legal at the time. Now Minnesota caps mortgage fees at 5%. Unlimited Funding's business dried up when the bottom fell out of the subprime market last year.

When we eventually reached Foster by phone at his home, he said he'd gone back to the auto sales business and did not have time to schedule an interview. Unlimited Funding Corporation wasn't a bank. It drummed up customers, helped them fill out a mortgage application, and turned it over to a bigger company. Burns's mortgage went to California-based BNC, the next stop on the mortgage money trail. BNC wasn't a bank either. But it had an important connection to underwrite or find the money for Faith Burns's refinancing.

JOHN ROSSI: BNC was a wholesale subprime mortgage lender, and they were a national lender.

DAN OLSEN: John Rossi was BNC's Regional Sales Manager based in Chicago, beginning in 2006. BNC doesn't exist any longer. But Rossi was willing to tell us how BNC's wholesale mortgage business worked. His salespeople would cold call local mortgage companies, like Unlimited, to get them to sell BNC mortgages.

JOHN ROSSI: An account executive in the heyday, whether it be for BNC or any of those mortgage companies at that time, were making six figures.

DAN OLSEN: The salespeople were making lots of money because business Rossi says was very good.

JOHN ROSSI: People wanted loans. Values for houses were appreciating, and there was a need to fill in Wall Street. So our business was very good.

DAN OLSEN: BNC had a pipeline to Wall Street. The company was a wholly owned subsidiary of the venerable Wall Street investment banking firm, Lehman Brothers. Lehman Brothers backed BNC mortgages. Lehman Brothers money came from investors, banks, insurance companies, money management companies, and others. Lehman attracted the investors by pooling Faith Burns's mortgage with billions of dollars of other mortgages then sold pieces of the pool to investors who wanted to make money off of rising real estate values. Investors loved the returns they were getting, and more investors wanted in Lehman Brothers and other investment banking companies tried to meet the demand. John Rossi insists they did that without compromising their standards.

JOHN ROSSI: Nobody underwrote or funded a loan that we ever thought was going to go bad. I mean, if we felt as though a particular loan wasn't something that was going to perform then, we just didn't do that loan.

DAN OLSEN: However BNC's sole business of selling subprime mortgages was risky by definition because many subprime borrowers had troubled credit histories. Faith Burns says she didn't even know the word subprime until she heard it on TV a year ago. She also says she didn't know her loan had an adjustable interest rate. When the rates ticked up, many borrowers were squeezed. Enough of banks subprime loans went bad that the company closed its doors in 2007, two years after Faith Burns refinanced with them. 1,200 BNC employees, including John Rossi, lost their jobs. Rossi says no one came out whole from the ordeal. He's philosophical about his own loss.

JOHN ROSSI: What I went through is nothing compared to some of the customers out there that are trying to make their mortgage payments.

DAN OLSEN: BNC was gone. But Faith Burns's mortgage was still alive on Wall Street. Lehman Brothers had pooled it, adding it into a large fund with lots of other mortgages. Lehman Brothers didn't return calls to say who the investors are, and it's not public information. So that's where Faith Burns's mortgage money trail goes cold. It's not easy to find who's holding the bag if Burns defaults on her loan. We called someone on Wall Street who manages money, maybe he'd know what happened to Burns mortgage.

TODD PETZEL: One analogy you can use is that of a butcher.

DAN OLSEN: Todd Petzel is the Chief Investment Officer for Offutt Capital Advisors. He had nothing to do with Faith Burns's mortgage. In fact, five years ago, he says he warned his investors about the risks of buying into deals like this. Petzel explains why the money trail has gone cold.

TODD PETZEL: The pig goes to the butcher shop, and it gets chopped up into different pieces. And some people like ham, and some people like the loin, and other people like sausage, and it all gets packaged up and sold to different folks. The problem, at the end of the day, and again, why your trail has run cold, is that once the mortgages are chopped up into all these different pieces, it's hard to put the pig back together again.

DAN OLSEN: It's likely different investors own different parts of Burns's mortgage, and they all want to be paid. So that's the money trail of Faith Burns's refinanced mortgage on her South Minneapolis home from 35th Street to Wall Street. From the small time New hope cold caller to Unlimited Funding Corporation now belly up in Bloomington to the now defunct BNC in Irvine, California to Lehman Brothers in New York City to investors everywhere.

By this time, Faith Burns's financial problems were growing. She closed up her business of boarding abandoned properties and took a lower paying job through a temp agency. Her monthly mortgage payments of $1,435 were going to a new player in her financial life. If you're keeping count, here's the fifth stop.

FAITH BURNS: The new company that I had to send money to was Chase.

DAN OLSEN: Chase Home Finance is a subsidiary of JPMorgan Chase, another Wall Street investment bank. Chase was the bookkeeper now in charge of collecting Faith Burns's monthly payments for Lehman Brothers investors. Burns's history with Chase was not smooth. She fell behind on payments in 2005 and went into foreclosure. But she managed to catch up. In 2007, Chase told her she was behind on her payments again. But that didn't square with Burns's record keeping. She pulls out boxes of statements and spreads them out on the dining room table of her South Minneapolis house.

FAITH BURNS: They were very confusing. They were showing more than what was owed, and I called them to see-- can we get a correction on the statement? And they said there's just the statement that they sent out, and for me, to ignore the statement.

DAN OLSEN: What was the first inkling you got that something wasn't right, that things weren't right?

FAITH BURNS: I say, when I went to go see my lawyer.

MARK IRELAND: My name is Mark Ireland, and I'm an attorney at the Foreclosure Relief Law project.

DAN OLSEN: Mark Ireland is a former assistant Minnesota Attorney General and by his own description, a geek when it comes to the inner workings of the mortgage meltdown. Faith Burns was referred to Ireland when she went to see a mortgage foreclosure counselor at Twin Cities habitat for humanity. Her home had been auctioned at a Sheriff's sale in November. Minnesota gives homeowners six months to get caught up before the foreclosure is finalized. She has until May 6. Attorney Mark Ireland says he saw problems with how Burns had been treated.

MARK IRELAND: Faith is just a very smart woman, and she's soft-spoken, and she is illustrative of the people who are in the foreclosure crisis right now.

DAN OLSEN: Ireland says Faith Burns isn't looking for a bailout. She just wants to be treated fairly.

MARK IRELAND: Shortly before she was foreclosed upon, she actually had thousands of dollars returned to her because they didn't want to slow down the foreclosure.

DAN OLSEN: Mark Ireland says by his calculations, Faith Burns was actually two months ahead on her payments. Burns had asked Chase to send her a record of her account. They sent her a printout designed to be read by bankers and accountants. The printout contains columns denoting principal and interest, but adding to the confusion is a column called suspense accounts. Chase says it does not accept partial payments. But Chase says it also creates suspense accounts to store partial payments until there's enough to make a full payment. Attorney Mark Ireland calls the document gibberish.

MARK IRELAND: You can't really figure out how this money was applied, where it went, and you would think if this is going to be her official record from Chase Home Finance, that anybody should be able to look at this and understand it. And I can't, and certainly, Faith can't.

DAN OLSEN: Ireland saw other problems along the way on Burns's mortgage money trail. He says she paid extremely high fees for her refinancing back when the whole process started three years ago.

MARK IRELAND: I think that broker made $12,000, $14,000 in this deal. I don't know how long brokers spend originating these loans, but I think that's a very, very good hourly rate.

DAN OLSEN: The fees swelled the total of what Faith Burns owed well beyond the value of her home. She now owes $209,000 on a house that according to city of Minneapolis property tax records was never worth more than $191,000. And for tax purposes next year, the city says the value has gone down even further to $174,500.

Ireland says Faith Burns was sold a defective mortgage, key players, failed to disclose the terms of the mortgage, violated truth in lending laws, and used incorrect numbers to calculate her costs. He's filed a federal lawsuit on her behalf, naming Chase and others all the way back to the BNC mortgage. Chase Home Finance the company collecting Burns monthly payment declines to speak on the record about the specifics of her foreclosure. Chase Spokesman Tom Kelly, based in Chicago, says Chase's job is to serve the investors, and putting people out of their homes is a last resort.

TOM KELLY: Our goal always whenever possible is to keep people in their homes. It just makes sense. As a servicer or/and representing investors, the investor doesn't want the house. They want the loan to be repaid.

DAN OLSEN: Kelly says Chase is renegotiating the terms of home mortgages where borrowers are in trouble.

TOM KELLY: We have modified or refinanced $4 billion of subprime adjustable rate mortgages, and we have another $3 billion in the pipeline.

DAN OLSEN: Chase's efforts come too late for Faith Burns. Tom Kelly says Chase's policy once foreclosure has begun does not include renegotiating a mortgage. Burns's Attorney Mark Ireland argues Chase has the power to renegotiate. Ireland compares the troubled mortgages held by Chase and other companies to cars that are lemons and need to be fixed.

MARK IRELAND: They're the designated mechanic for the car. And so it's true that they didn't design the car. But they're the ones that have that get paid every month to fix it.

DAN OLSEN: Ireland wants Faith Burns's mortgage thrown out and rewritten. There are other players in Faith Burns's mortgage problems. One is Minneapolis-based US Bank. It's the trustee for Burns's house. Its job is also to watch over the property on behalf of the investors, US Bank says it can't do anything for Burns, it's just the trustee, and declined to be interviewed. There are clear winners and losers in Faith Burns's mortgage money trail. The cold caller Louis Belfrey, who first approached Faith Burns, lives in a rented townhouse his landlord gave back to the bank.

Unlimited Funding Corporation, the company that wrote the mortgage is out of business, its owner Rocky Foster is back in the auto sales business and says he's working 12-hour days to survive. BNC, the company that underwrote the mortgage, is closed. Its parent company, Lehman Brothers, took a write down of billions of dollars for its subprime losses and is being sued by unhappy investors. Lehman Brothers isn't alone. Lawsuits abound from investors, shareholders, and others hurt in the mortgage meltdown. Faith Burns and her three children have been told to be out of the house Tuesday, May 6, a development she calls the demolition of her American dream.

FAITH BURNS: My thing is, what can we do? What should we be doing now as a homeowner? I'm going to court because I feel like we should. That may not happen, even though they may not say my house, but there's something that we have to do. Who can be quiet? No one can be quiet at this time.

DAN OLSEN: Many people in her plight are, as one expert after another told us troubled homeowners are putting their heads in the sand hoping their problems will go away. Faith Burns says she initially blamed herself for the fix she's in. She should have pushed harder to understand what she was signing. Now she's decided to make noise. Faith Burns's version of the American dream uses homeownership as the springboard for personal wealth, stability, the future. She wants her children to have a chance to go to college.

The financial difficulties she's been encountering have already cut into those dreams. Faith Burns doesn't know most of the people who played a role in her mortgage money trail, and they are unaware of her personal struggle to keep her home. The outcome isn't clear. For Faith Burns, for her neighbors, for neighborhoods everywhere, the effects of the mortgage foreclosure crisis continue to spread. With American radioworks producer Sasha Aslanian, Dan Olson, Minnesota Public Radio News, Minneapolis.