On a cold October morning, Lee James puts down his paintbrush at a modest house he is fixing up in the epicenter of arguably the most corrosive wave of mortgage fraud ever to hit Indianapolis.

Of the 40 or so dwellings on Commodore Drive, where James is painting, only about a dozen are lived in. The remainder look forlorn. Of the 360 homes on neighboring blocks, more than 140 are likely vacant.

Welcome to Windsor Village.

Punishment awaits for Robert Penn, the man who played a lead role in the scam that devastated Windsor in 2006 with dozens of foreclosures and boarded homes. Last week, he pleaded guilty to three federal charges related to the scheme.

Today, this resolute old Eastside neighborhood shows signs it is fighting for its life.

Built to house families of defense workers in the 1940s and beached by Wall Street’s debacle of easy loans in the 2000s, Windsor Village is starting to attract a trickle of new renters.

Investors are taking notice, buying houses and trying to lure families to come make a stand in 1,900-square-foot homes priced as low as $8,000.

Only a few years ago, prosecutors contend, Penn and his accomplices pried $6.9 million out of California mortgage lender Countrywide and other banks by doctoring loan documents that showed the value of these houses was $120,000. Now, the average asking price is about $39,000, said real estate expert Brenda Bertram.

“It’s not a bad neighborhood. This could be the kind of place where you’d want to raise a family. It just needs some help,” said James, 73, a handyman helping investor Fred Williams fix 6154 Commodore.

Williams said he grew up not far from Windsor Village, owned his first home there and now has bought 14 investment homes, chiefly on Commodore.

“I haven’t tried to sell anything, so I don’t know what kind of prices these houses would get,” said Williams, a foreman at Thompson Construction in Indianapolis. “I don’t put the value on them to sell them. Their value to me is as rentals.”

Workers from the nearby Raytheon plant, particularly the custodial staff, are likely tenants, Williams said, along with kitchen employees from restaurants Downtown and on Shadeland and Arlington avenues. Rents can range from $350 to $500 a month.

James, a retired construction worker who came to the city decades ago by way of Chicago and Frenchmans Bayou, Ark., looks down Commodore, a curving street quiet as a Brown County farm lot. The only sounds are the wind rattling the autumn leaves overhead and the distant noise of a big commercial lawn mower.

Steve Michaels, a mailman whose route takes in Windsor Village, estimates 40 percent of the homes here are vacant. That’s close to the estimate of Rainbow Realty office manager Chris Hotka. He figures possibly half of Rainbow’s 100 properties in Windsor Village are rented.

Only three years ago, the homes were filled with renters. But as the failed Penn deal led to 136 foreclosures, families were evicted. Other families renting houses from other landlords gradually left the eerily quiet blocks, or other mortgage schemes tanked, forcing a wider ring of foreclosures.

Vandals stepped in, stripping homes of copper pipes, appliances, water heaters and anything else of scrap value. The legacy has been unpruned shrubs, peeling paint, unpaid taxes and diminished property values across the Eastside. Lawyers figure each foreclosure reduces the value of all homes on nearby blocks by about 1 percent.

Here and there, though, signs of vitality are budding. There are curtains in some windows and cars in driveways.

Brenda Bertram, owner of Bertram Group, and other real estate experts say Windsor and other old Indianapolis neighborhoods suffered because of fraud tied to easy-to-get loans and lax oversight by state and federal regulators of lenders, brokers, appraisers and title agents.

Bertram has one property now for sale in Windsor Village, a single-family home at 6220 Commodore priced at $8,000. In 2005, Penn and his accomplices had borrowed $96,000 on the house from Countrywide, although prosecutors later figured the fair market value then was actually $50,000. The bank lost $46,000 on the deal, prosecutors say.

Penn’s attorney advised him to decline comment for this article. Penn faces a prison sentence of up to 35 years on three charges: five years for conspiracy to commit wire fraud, 20 for wire fraud and 10 for money laundering conspiracy. The maximum possible fine on each charge is $250,000. Sentencing is expected by year’s end.

Federal prosecutors agreed not to bring charges against Penn for an alleged $200 million counterfeit funding and bond scheme on the Pacific island of Saipan.

Operating as Land Economics, EU Group and other firms, Penn recruited investors, including family members in Virginia, and used their names to help buy property in Windsor Village, chiefly from Rainbow Realty.

All of the loans defaulted.

Despite looming problems, James still sees salvation for Windsor Village. So does Cynthia March, 43, who recently found her way to a rental on Commodore Drive after moving from Jackson, Tenn.

“This is a good neighborhood, a good neighborhood to raise kids,” March said.

“There’s not any crime. But people don’t know each other. They will. They’ll meet up at the store. They’ll look out for each other.”