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KAI RYSSDAL: The housing market inched a step closer to salvation today. A key Senate committee approved a plan to give cheaper government-backed mortgages to as many as half a million borrowers. The president's still not sure if he's going to sign it, though. Meantime, one analyst said today banks are going to have to set aside another $170 billion through next year to cover losses on bad credit.

Down at street level, the credit crunch comes in much smaller dollar amounts. Lenders are selling off thousands of houses they've foreclosed on for pennies on the dollar. And, Mhari Saito reports from WCPN in Cleveland, those neighborhoods are crumbling.

MHARI SAITO: Florida retiree George Petrena likes to surf eBay for good deals on piggy banks. But earlier this winter he found a deal too good to pass up: a three-bedroom Cleveland house, opening bid $1.

George Petrena: This house that I bought in Cleveland, it showed that there needed cupboards in the kitchen and it needed a sink. And that was all it showed that it needed. But, of course, I don't know because I haven't seen the place.

I saw it. It had been broken into and the garage was caving in. Petrena was going to fix it up and rent it out. Not anymore. This was the house's second time on eBay. The buyer before Petrena paid $2,000. The guy before that bought it from Citi Residential for $500.

Cleveland's Regional Economic Development Director Chris Warren says lenders are selling off their worst properties to wholesalers. The wholesalers then resell the houses any way they can.

Chris Warren: Part of the wreckage is the multitude of properties left barren with property owners or responsible parties -- so-called responsible parties -- who are unloading them from a desk in New York City, and they're doing this through the thousands of properties.

One large seller in Cleveland is Citi Mortgage. Citi bought subprime giant Argent last summer. Argent was once Cleveland's largest lender. Many of its loans have gone bad and the houses sit vacant. In a written statement, Citi REO says it does not sell houses in bulk but sells off inspected houses to investors who are "positioned to absorb numerous properties."

Gary Kotlarsic: This one, as you can see, the siding is missing, the windows are old, downspout's missing. It's boarded up. But if you've got $500 down, for $350 a month it's yours.

Realtor Gary Kotlarsic is showing me what the houses are like. Some investors resell the houses, often at prices 20 or 30 times what they paid for them. Kotlarsic lives in Cleveland's Slavic Village neighborhood, an area with one of the highest foreclosure rates in the country. He says houses next door are going for virtually nothing, so he and his neighbors can't get anything close to what they originally paid for their own houses.

Kotlarsic: I've had other clients who worked their whole life to have a house, to build equity for their families. They get up in their age and then the family needs to liquidate that to pay for their expenses, and they don't have anything to liquidate. Their value's gone.

Wholesalers say they serve a purpose by putting fixer-uppers back on the market at monthly rates locals can afford. South Carolina's James Odell Barnes says he's helping investors buy 100 bank-owned properties a week in Cleveland and Detroit.

JAMES ODELL BARNES: There's either gotta be people like us, me and my investors, or you're going to have to have a whole lot more bulldozers bulldozing these houses.

Local county government is working on a land-bank proposal that could hold properties banks want to offload. And Citi Mortgage says it's just started working on a pilot project in Cleveland that lets community development corporations get first dibs on the bank-owned houses in their neighborhoods.

In Cleveland, I'm Mhari Saito for Marketplace.