In ’05, a small company bought up run-down duplexes in northeast Indiana at $50,000 a pop. Less than a month later, they were selling them for $120,000 to church secretaries, truckers, retirees and factory workers.

“It’s just the worst neighborhood in my township,” said William A. Birkle, a county assessor in Indianapolis. “At one point in time, the police barricaded the neighborhood with concrete so there was only one way in and one way out so they could control the drug trade.”

Now a federal investigation is underway to look into accusations of a network of real-estate and loan fraudsters that have left borrowers with dubious property investments in the neighborhood, as well as potentially permanent black marker on their credit history.

The froth of the housing boom has receded, and now we see the sticky oogjie left in its wake.

“Suit Says Neighborhood’s Boom Was Built on Mortgage Fraud” [NYT]

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