She discovered her homeowner's policy didn't cover mold. She can't fix the house, and can't live in it.

In warm months, Touchstone lived in a tent in her yard. She showered with a hose, cooked with a microwave in her garage. When the weather turned cold, she moved into a small trailer, but the heater wouldn't work. Then she moved into a friend's house. She enters the farmhouse only rarely and wearing a respirator.

More Americans are learning the distress that this enduring organism can cause. Mold has ruined families' finances, divided scientists, changed insurance coverage, captivated media and created a cottage industry of repair firms. And the uproar shows no signs of abating.

Mold is everywhere -- outside and inside every type of building. There are more than 100,000 species. Some are beneficial, used for making penicillin, for example, or blue cheese. Mold appears in the Old Testament's Book of Leviticus, which mentions scouring a moldy home.

Mold reproduces by generating spores that can float in the air and land on damp spots. The spores feast on wood, paper, drywall, carpet, wallpaper and ceiling tiles. They can grow on virtually any organic substance as long as moisture is present.

Although some people aren't bothered by mold, all varieties have the potential to cause illness. Mold triggers allergic reactions and asthma attacks, fungal infections in the lungs of people with chronic medical conditions, and hypersensitivity pneumonitis, an inflammation in the lungs. Some molds, such as Stachybotrys chartarum, are known to produce toxins that can be inhaled.

Mayo Clinic doctors concluded in 1999 that mold may be responsible for a majority of sinus infections in the United States.

The walls in Tonoa Ward's basement are covered with streaks and splotches of black mold -- remnants of flooding that contaminated about 400 west Atlanta houses.

The worst flood struck in September, when heavy rain caused a sewage overflow. Contaminated water rose up to 8 feet in areas of Vine City and Washington Park. In Ward's basement, the water climbed higher than 5 feet. Two months later it flooded again.

Ward's daughter Cierra, 5, was hospitalized in December with pneumonia and bronchitis. Cierra has been diagnosed with asthma since the flooding began. Son Terry, 13, has new sinus and breathing problems.

The air vents in the house are sealed so the heating and air-conditioning unit in the basement doesn't spread more mold spores upstairs. The Atlanta Housing Authority said last week it will help Ward, who receives federal Section 8 assistance for low-income renters, find new housing quickly.

"Ms. Ward and her children need to get out of there right now," said Almedia Cruz of ACC Environmental Consultants, hired by the Fulton County Health Department to assess the health fallout. "They need a safer place."

Fulton County declared the flooding aftermath a public health emergency in February. Residents continue to report new cases of asthma and respiratory illnesses, skin rashes and headaches since the flooding began.

The city of Atlanta plans to buy 70 properties to fix sewer problems and is renovating 80 houses.

Buildings shut; millions spent

Mold outbreaks across the country have closed schools, courthouses, office buildings, apartment complexes and hotels, costing millions of dollars in repairs or losses.

Public health departments have seen a surge in mold-related inquiries. Minnesota's Department of Health, for example, had fewer than 100 mold-related inquiries in 1989; it had 150 per month in 2001. Georgia doesn't keep such records.

Mold has crept into politics.

This year, 17 states introduced legislation related to mold, including bills to study health effects, license remediation firms and create new insurance regulations. Eight states enacted mold laws or resolutions, reports Aerias.org, an online resource on indoor air quality.

In Georgia, resolutions to study mold-related problems failed in the 2003 Legislature.

A bill is pending in Congress to study health problems caused by mold; develop standards for inspections, remediation and testing; give home buyers and renters some protections; and create a mold hazard insurance program.

The Atlanta-based Centers for Disease Control and Prevention has asked the Institute of Medicine, a national advisory group, to study the medical damage from mold. A report is expected soon.

The panel has plunged into a continuing debate on the type and severity of mold's afflictions: Is it simply a trigger for allergic reactions and asthma attacks and the source of some infections, or can it produce fatigue, memory loss and concentration problems as well as pulmonary hemorrhage in infants?

Mold research appeared to take an alarming turn in 1994, when physician Dorr Dearborn noticed a pattern of pulmonary hemorrhage in Cleveland infants. He and a CDC epidemiologist, Dr. Ruth Etzel, reported that infants with pulmonary hemorrhage were more likely than a control group to live in homes with a lot of stachybotrys and other molds.

But in 2000, the CDC found flaws in the study methodology and, reversing its original conclusions, said the association between mold and hemorrhage was not proved.

Dearborn and Etzel stand by their original conclusions.

Last year, doctors in Savannah said two cases of pulmonary hemorrhage in babies fit the profile of the Cleveland cases, including exposure to stachybotrys, but that a definitive link could not be proved.

Linking mold and illness such as memory loss, fatigue and Touchstone's "brain fog" is controversial.

Harriet Burge, a researcher at the Harvard School of Public Health, said almost all evidence of such damage from mold is anecdotal.

"I haven't seen any good evidence to document the effect on the brain," Burge said. "There are endless reasons for short-term memory loss. Some of the people claiming mold damage have psychological problems that need to be addressed."

Still, in 1998, Dr. Eckardt Johanning, a physician at the Mount Sinai School of Medicine, studied 151 patients exposed to mold and found about half had central nervous system complaints such as concentration problems, dizziness and fatigue.

Overall, most mold patients don't have cognitive problems, he said. But many doctors and scientists who debunk such problems "don't talk to patients," said Johanning, who has seen hundreds of such patients. "These patients are suffering."

'Mold loves paper'

The spike in mold complaints invites the question: Are our homes moldier than they used to be?

Some experts think the answer is "yes."

Joe Lstiburek, a Massachusetts-based building design expert, said more moisture-sensitive building materials invite mold growth. "We used to have plaster," he said. "It's drywall now. It's paper. Mold loves paper. And we're putting it on the outside now.

"We've gone from rocks and sticks to paper. Even the dumbest of the Three Little Pigs didn't build a house out of paper." While they're using building materials more susceptible to mold, many builders eliminate or don't properly install flashings and other means of preventing moisture intrusion, Lstiburek said.

The Georgia Board of Realtors in January 2002 recognized the growing problem when it added a question about mold to the long list of items sellers are asked to disclose when they put new or existing houses on the market.

On the surface, the Alpharetta house that Jeff and Gail Terrell bought two years ago is an impeccably decorated $350,000 suburban dream.

But mold in the basement and walls made life there "total living hell," Jeff said.

The whole family has been ill. Gail has hypothyroidism, and she and Jeff suffer from chronic fatigue. "My kids have been sick, with runny noses, coughing," Jeff added.

They discovered a leak almost immediately after moving in. An inspection showed the builder didn't put flashing under a window in the stucco exterior, Jeff said. "Water has been leaking for five years. We went back to the builder, who told us to jump in the lake."

The Terrells say they can't afford to move while paying their current mortgage. They have sued the builder, claiming negligence, and the previous owner of the house, alleging he concealed the damage. Both deny the allegations.

Caps put on claims

The sudden increase in mold claims took the insurance industry by surprise.

Property and casualty insurers paid out $2.5 billion in mold-related claims in 2002, nearly twice as much as in 2001. The industry estimates there are 10,000 active mold-related lawsuits.

Mold mushroomed in the public consciousness after an Austin, Texas, jury awarded $32 million in 2001 to Melinda Ballard and her family. Her lawsuit charged her insurance company delayed mold claims for her 22-room house in Dripping Springs. A state appeals court reduced the award to $4 million.

In their moldy house, Ballard said, her husband, Ron, and son, Reese, had cognitive problems and Reese had respiratory illnesses. Ballard herself coughed up blood.

Homeowners' policies in Texas offered more liberal coverage than in other states and, after the Ballard case, claims from Texans poured into insurance companies. Mold-related claims costs there rose 560 percent in 2001 from the year before, said the New York-based Insurance Information Institute, an industry trade group.

At the urging of the industry to stem skyrocketing costs, the Texas insurance commissioner limited coverage for mold testing and cleanup, but declined to cap mold payouts.

Texas' situation was extreme, but other states are dealing with the mold issue. More than 30 states have $5,000 to $10,000 caps on payouts per claim in homeowner policies, reports the insurance institute.

"Capping a policy, or excluding the coverage entirely, leaves the public vulnerable," said Robert Hunter of the Consumer Federation of America.

The insurance institute's P.J. Crowley defends caps, noting the typical mold insurance claim has risen "from a few hundred dollars to tens of thousands of dollars."

Georgia Insurance Commissioner John Oxendine issued new mold guidelines last month for homeowners' insurance. Policies will no longer be allowed to exclude mold coverage. Mold-related environmental testing may be subject to a $5,000 cap, but there will be no such limits on property repairs, Oxendine said.

Touchstone trains and boards horses and teaches riding, so the 23-acre property she bought for $283,000 was almost too good to be true. But after her symptoms appeared, her insurance company had the house tested and found elevated levels of mold.

Her policy had an exclusion for mold coverage. "The insurance company dropped me," Touchstone said. So she had to buy a high-risk policy.

"I can't sell [the house], can't afford to fix it," she said. "I've depleted my savings."

Touchstone rents a room and teaches riding at a YMCA camp. The mortgage payment on the farmhouse hasn't been made in months. Her symptoms have improved, but her finances haven't. She filed for personal bankruptcy in June.

One warm night a year ago, she watched lightning strike near the horse pen. "I just wished it would have hit the house," Touchstone said. If it burns to the ground, insurance will cover it, she said.