The walls are bare, the closets are empty, and Connie and Timothy Pent and their two teenage children are living out of boxes as they wait for a dreaded knock at the door of their three-bedroom house in Ocala, Fla.




They've fallen behind in payments on their home loan, and their lender told them in July that foreclosure was imminent.




"We thought we were fine," said Connie regretfully. "You never know."




An increasing number of homeowners and prospective homeowners are getting caught up in the fast-spreading mortgage crisis that is claiming victims from all income levels and demographic groups. Like the Pents, many are trying desperately to get their loan terms reworked but are finding it's difficult in a tightened market.




For five years, the housing boom put money in the pockets of lenders, brokers, realtors and investors and granted easy mortgages to homeowners with both good and blemished credit. But as home prices decline and interest rates climb, the cracks in the housing market's foundation are widening.




Exotic mortgages, once hailed for helping to increase U.S. homeownership to its highest level at 68.9 percent, have become the undoing of many.




Loans with adjustable rates, payment choices and loose requirements have trapped borrowers in too-high payments with few options for escape. Some have taken on second and third jobs, depleted savings, retirement and college funds and wrestled with lenders to stave off foreclosure. Those who fail see their homes sell at auction.




"The increasing availability of mortgages has been an important and positive long-term trend," said Doug Elmendorf, a Brookings Institution economist. "But like many positive developments, this one was taken to an unjustifiable extreme."




Many of the victims are subprime borrowers &

those like the Pents who don't qualify for market interest rates because of blemishes on their credit record. The Center for Responsible Lending estimates that 2.2 million subprime home loans made in recent years have ended or soon will end in foreclosure.




But there are many other ways to be hurt in the mortgage crunch.




Many prospective home buyers, through little fault of their own, are having trouble getting mortgages because of the changing market.




Others were sold on too much house, piled up huge loans based on the inflated value of their property and didn't fully understand the interest rates they would have to pay.




Nearly $1.12 trillion worth of hybrid and traditional adjustable-rate mortgages were originated in 2005 and 2006, while $779.13 billion of interest-only ARMs were issued in that period, according to a survey from the Mortgage Bankers Association.




Many of these loans offered low "teaser" interest rates that will reset through 2009, slamming borrowers with higher rates.




Attempts to rework troubled loans will become increasingly common since foreclosure benefits neither lender nor borrower, said James Gaines, a research economist with The Real Estate Center at Texas AM University.




The problem is that the lender may not have any authority to redo them because of the way loans are now bundled and resold, with repayment risk changing hands several times.




"It's unlike the old days where the bank you borrowed from just kept your loan on the books," he said.




David Downs, a professor of real estate at Virginia Commonwealth University, believes blame for the current quagmire falls on all involved. But he says the consumer should be held accountable first.




"If somebody takes on financial risk, it's incumbent on the consumer to understand that," Downs said.




The Pents grieve losing their three-acre property in the middle of horse country, with its swimming pool and fish pond.




"It was my dad's house," said Connie, 39, an elementary school receptionist. "It's quiet, it's open &

we love it."




Their troubles began in April 2006 when they refinanced the remaining $207,000 on a 30-year fixed loan to a two-year adjustable rate mortgage so they could pay down hefty obligations on their SUV and pickup truck.




A mortgage broker informed them just before the closing that the remaining debt would be $3,500 more than expected, but they signed anyway.




With their new payments, a sequence of events left them unable to keep up. First Connie's mother moved out and stopped helping out with mortgage payments. Then her husband Timothy lost his job at a mobile home factory because of the housing industry slump.




Their loan servicing company first demanded payments, then stopped returning their calls.




"We probably should have been better prepared for it," Connie said. "When the job goes, unfortunately, so does everything else."




""""""




With two adults, two small children and three dogs, Val Rasmussen's 14-by-70-foot trailer in Lincoln County, Mont. was crowded. After her husband, Tom, landed a better-paying job, they decided to sell the trailer and move into a three-bedroom house near her grandparents.




"This was a pretty major step for us, buying a house," the 27-year-old Rasmussen said.




With their trailer languishing on the market, the Rasmussens went ahead with the purchase with 100 percent financing from First Magnus Financial Corp.




The family closed on the $159,000 loan last Wednesday with the big move scheduled for Saturday. But on Thursday morning, First Magnus informed them that the loan would not be funded. The Tucson-based lender suspended its operations indefinitely.




The Rasmussens scrambled to find a new loan, but found no one was underwriting 100 percent mortgages anymore. Desperate, they dropped the price of their trailer by $10,000 and found a buyer.




They plan to use the money to secure a traditional 30-year fixed-rate mortgage with 20 percent down, but they worry that their buyer could run into trouble, too, in the current mortgage market.