``American Homeowner Preservation, a Chicago-based investment firm, purchased the mortgage for less than half of what Ragusa owed. Chief Executive Officer Jorge Newbery called the father of three in August with an offer: Pay $5,000 and the company will drop the foreclosure case and erase the more than $100,000 of unpaid principal and penalties amassed.

"They're a lot more flexible than a bank," said Ragusa, 48, who ran into financial trouble after losing his job in collections for a cable company in 2007. "They can work with you because they're a private company and they can basically set their own rules." ''

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