Continued: Can a homeowner fight back?

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Earlier this month, Mark Miernicki jumped out of his office chair and shouted when he heard the news. The feds had filed civil fraud charges against Angelo Mozilo, onetime CEO of the Countrywide Financial mortgage empire, whose giant portfolio of subprime loans helped bring on the housing collapse.

"They finally went after one of the heads of the monster," Miernicki says.

A loan from Countrywide, brokered by a company accused of deceptive and predatory lending, has left Miernicki struggling to hang onto his Columbia Heights house.

Miernicki first contacted Whistleblower last year, hoping I could shed some light on his erstwhile broker. I was able to tell him that Attorney General Lori Swanson already was on the case. She had sued the brokerage, Source Lending Corp. of Plymouth, in August 2008 "for using false, misleading, and deceptive acts and practices to sell risky and complex residential mortgage loans to Minnesota homeowners."

Now Miernicki is cooperating with Swanson's lawyers in their suit, which is pending in Hennepin County District Court. But he considers Source Lending a small fish compared with something like Countrywide.

As he got further and further behind in his mortgage, Miernicki has educated himself in the big picture of America's meltdown. For him, the charges against Mozilo are a stark contrast to the massive bailouts of big financial institutions.

"I'm watching billions fly out the window," Miernicki says. "I can't get a break."

Miernicki, 45, has a good job as an engineer with the Minneapolis public schools and has lived in the comfortable four-bedroom stucco house on NE. Quincy Street for 17 years. His trouble began after he went through a divorce and needed to buy out his ex-wife's interest in the house. At that time, he was getting constant cold calls offering sweet terms on refinancing.

In October 2006, he accepted a deal offered by Source Lending. It was a $198,000 "negative amortizing" mortgage, meaning the initial payments don't even cover all the interest, and the principal actually grows every month. The penalties for paying off the loan early are so high that they would be illegal if the loan originated with a Minnesota lender. Miernicki said he was deceived about the terms.

"This is the poster child for the predatory loan," said Amber Hawkins, Miernicki's attorney and a lawyer with Mid Minnesota Legal Assistance. Hawkins calculated that Source Lending earned about $10,000 in fees and commissions on the loan.

"They basically got like 5 percent to totally screw this guy, to just thrust this guy into foreclosure," she said.

Nick Kelvie, the former Source Lending broker that Miernicki said arranged the loan, said he didn't remember it and declined to comment further.

Miernicki's monthly payments kept rising until he couldn't afford them. He made a partial payment in February. Countrywide, now owned by Bank of America, sent it back. That's a common practice with partial payments, putting lenders in a better position to foreclose.

Hawkins is looking for ways to help Miernicki, now about $10,000 in arrears, stay in his home. Meanwhile, Miernicki is contacting politicians, educating himself on the economic meltdown and trying to ensure that the little guy gets heard as the foreclosure crisis grinds on.

Whistleblower will be there to tell you what happens to the state's suit against Source Lending and whether Miernicki can stay in his house.

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