RENEE MONTAGNE, host:
The neighborhoods of north Minneapolis have long been a bit rougher and poorer than the rest of the city. Now with the mortgage foreclosure crisis, the troubles there have multiplied. Today in some parts of the city, one in seven houses is abandoned. In the first of two reports, NPR's Jim Zarroli looks at how the foreclosure crisis is playing out there in North Minneapolis.
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JIM ZARROLI: Nelly Campbell sweeps the twigs and grass off the walkway of her home on Auberge Avenue. Campbell remembers when she knew almost all of her neighbors, and most of them owned the homes they lived in. These days only a few do.
Ms. NELLY CAMPBELL: All the rest of the houses is sold or somebody's renting them.
ZARROLI: How many houses are vacant right now?
Ms. CAMPBELL: It's about eight.
ZARROLI: Eight right here on this street.
Ms. CAMPBELL: On this block, yeah. Never before. To me it's like a ghost town.
ZARROLI: What's happened here has happened all over North Minneapolis. In the space of a few years, long-time residents have fled, property values have tanked, and hundreds of homes have been abandoned.
R.T. Rybak is Minneapolis's mayor.
Mayor R.T. RYBAK (Democrat, Minneapolis): Unfortunately, when America gets a cold, neighborhoods like North Minneapolis get pneumonia, and foreclosure hit much harder there than other parts of town.
ZARROLI: The changes here have come with dizzying speed. For decades North Minneapolis has been known as a tough working-class neighborhood. It's got the highest concentrations of African-Americans in a heavily white city. A few years ago, during the mortgage boom, North Minneapolis was discovered by investors. They liked the cozy, tree-lined streets close to downtown, and they liked the solid old bungalows that could be bought cheap and rented out. Many of the most stable long-time residents drifted away.
Mr. JOEL BREGGEMANN: Ready?
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ZARROLI: Joel Breggemann tosses a tattered soccer ball across his lawn and watches his dog Cooper run after it. Breggemann's yard on Dupont Avenue North is surrounded by a wooden fence. He built it because he wanted more privacy. Breggemann says the newcomers in the neighborhood have tended to be a rougher crowd than those they displaced.
Mr. BREGGEMANN: Blatant drug dealing, residents who spent their entire day out on the front step of the house drinking from 8:00 in the morning till 2:00 o'clock in the morning and would have their car parked in the street in front of the house with music blaring to the point where I wasn't able to ever even enjoy my own screen porch because the music was so loud at the house behind me, you couldn't hear yourself think.
ZARROLI: The area's troubles have been greatly aggravated by mortgage fraud, says Assistant U.S. Attorney Joe Dixon.
Mr. JOE DIXON (Assistant U.S. Attorney): There are always victims in fraud cases, but the kinds of cases that we've been prosecuting in the last year have had a dramatic impact on the communities in which these properties are located.
ZARROLI: The most notorious case involved a firm called T.J. Waconia. U.S. officials say the company sold properties at inflated prices using fraudulent appraisals. The founders later pleaded guilty to mail fraud and 141 North Minneapolis houses once owned by the firm now sit empty.
The fraud helped drive house prices to artificially high levels, and when the subprime market collapsed, North Minneapolis was left with hundreds of foreclosed properties.
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ZARROLI: These houses have become magnets for crime. Today a Minneapolis police sergeant is sealing the doors of one house with plywood. The overgrown lawn is choked with dandelions and a yellow foreclosure notice is stuck to a window. This house was taken over by gangs who used it to sell drugs.
Crime prevention specialist Tim Hammett says that if houses like these aren't sealed up quickly, vandals strip them bare.
Mr. TIM HAMMETT (Crime Prevention Specialist): I came home from lunch one day and I saw a woman who was blatantly just tearing siding, aluminum siding, off the house. I walk up to her and I said, what the heck do you think you're doing? And she says, nobody's living here, who cares?
ZARROLI: The vandalism can have dangerous consequences. Three times this year houses exploded and burned because thieves stole the copper piping without shutting off the gas. The city is buying some of the vacant homes from the banks that own them. The hope is that by reclaiming and renovating these properties they can lure back stable families. Again, Mayor Rybak.
Mr. RYBAK: These neighborhoods, which have very good housing stock, can attract good solid homeowners. The problem is that we have been dealing on such a large scale because we have so many foreclosures and so many of these properties tied up with predatory lenders.
ZARROLI: But the subprime crisis has sent prices tumbling back down again and a new generation of investors is buying up a lot of foreclosed properties. City officials worry that a lot of these will end up as inexpensive rentals, and that's led to a new struggle over North Minneapolis's future.
Jim Zarroli, NPR News.
MONTAGNE: Tomorrow, Minneapolis tries to lure homebuyers back to the north side.