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Eighty-five bungalows dot the cul-de-sac that joins West Ontario Avenue and East Ontario Avenue in Atlanta. Twenty-two are vacant, victims of mortgage fraud and foreclosure.

Now house fires, prostitution, vandals and burglaries terrorize the residents left in this historic neighborhood called Westview Village.

"It's created a safety hazard. And if we have to sell our house tomorrow, we're out of luck," said resident Scott Smith. "Real estate agents say to me 'We're not redlining you, but I tell my clients to think twice about buying here.' "

As defaults surge on mortgages made to borrowers with spotty credit and adjustable-rate loans, more people are noticing that their neighbors are caught up in the meltdown. Their misfortunes are haunting those left living on the same streets.

The effects aren't confined to just low-income or redeveloping communities. They also are seeping into middle-class neighborhoods and brand-new developments.

California's Central Valley has been hit particularly hard. Thousands of homes were snapped up by San Francisco Bay area speculators who hoped to flip their homes and turn a quick profit.

They were caught short when the housing market turned. Many investors and other buyers are now trapped by falling home values and adjustable rate mortgages that are resetting to higher rates.

Some speculators have tried to rent their properties. Others simply walked away from the homes they bought just a year or two earlier. In many cases, the purchases were made with no money down.

California ranks second for the rate of foreclosures, with one filing for every 88 households, according to RealtyTrac Inc., which monitors foreclosures. Nevada is the worst, with one for every 61 households, while the nationwide rate is one foreclosure filing for every 196 households.

In Atlanta, Smith, the vice president of Westview Community Organization Inc., keeps a map of his neighborhood, tracking each vacant property and notifying local officials when nefarious activity is suspected.

Georgia has the eighth- largest foreclosure rate in the nation, one filing for every 142 households.

"They've seen a lot of prostitution in the area, vagrants wandering in and out of the empty houses and drug activity," said Officer Dakarta Richardson of the Atlanta Police Department. "Some people that I talked to are afraid to walk out of their homes at night."

Some other people in the area have been affected by break-ins, and there have been house fires in several of the vacant homes in the past year, Richardson said.

The rise in crime in Westview is typical of a neighborhood struggling with numerous foreclosures, according to a recent study by Dan Immergluck of Georgia Institute of Technology in Atlanta and Geoff Smith of Woodstock Institute in Chicago.

That study showed that when the foreclosure rate increases 1 percentage point, neighborhood violent crime rises 2.3 percent.

"The key here is the concentration of those foreclosures at a neighborhood level. When you have more than one foreclosure in a few block area, that's when you start to think about the effects on property values and the effects on crime," Immergluck said.

A report published this month by the Center for Responsible Lending, a Durham, N.C.-based consumer advocate, estimates that 44.5 million U.S. households will see their property values decline a combined $223 billion as foreclosures surge in coming years, particularly in minority communities.

Historically, the most affected areas were lower-income and were prone to subprime and predatory lending, irresponsible house flipping and mortgage fraud, Immergluck said.

However, "the problem now is on a different scale," he said. "It's affecting a lot more suburban, moderate-income places" as more people of different incomes default on riskier loans.

In the Franklin Reserve neighborhood of Elk Grove, a suburb south of Sacramento, homeowners are fighting inner-city problems such as gangs, drugs, theft and graffiti.

During the boom, the suburb sprouted 10,000 homes in four years. Now many houses stand empty.