On March 26, 1996, at 1045 Pacific standard time, a Piper PA-16, N5638H, registered to and operated by the pilot as a 14 CFR Part 91, personal flight, experienced a loss of engine power shortly after takeoff from the Martha Lake Airport, Lynnwood, Washington. The pilot initiated a forced landing over a residential area and collided with trees during the descent. The airplane came to rest inverted in the front yard of a residence. Visual meteorological conditions prevailed at the time and no flight plan was filed. The airplane was substantially damaged and the private pilot was seriously injured. The private pilot rated passenger received minor injuries. In a written statement, the pilot reported that the engine lost power shortly after taking off to the north. The pilot stated that he verified the fuel selection, checked the magnetos and carburetor heat to try to restart the engine. The engine did not start and the pilot set up for an emergency landing. The pilot stated that he made a slight right turn to try to locate a suitable landing area, however, the area was covered with trees and houses. The pilot reported that he aimed the airplane between two trees to soften the impact and to avoid colliding with houses. The airplane struck trees and came to rest inverted on the front lawn of a residence. The wreckage was moved to a secured facility to inspect the engine. The engine was found to rotate easily, with compression developing in each cylinder. Rocker arm, valve train and accessory gear continuity was established. All spark plugs displayed normal operating signatures, and both magnetos produced a spark with hand rotation. During the inspection, no evidence was found to indicate a mechanical failure or malfunction.