The St Petersburg Times reports from Florida. "Subprime companies found fertile ground in the Tampa Bay area as home values soared in 2004 and much of 2005. The old rule of thumb, no mortgage within seven years of a bankruptcy, went out the window as lenders scrambled to make loans to borrowers they once would have shunned. 'It's risk vs. reward,' says Richard Doyle, a Pinellas County real estate agent. Lenders 'get higher interest in return for higher risk.'"

"Among Doyle's clients is a resident of upscale Belleair Beach who got a $576,000 loan at 8.65 percent interest from Fremont in 2005 even though he had filed a personal bankruptcy four years earlier. He defaulted on the payments, and the house is now in foreclosure, slated for public sale in April unless a buyer can be found before then."

"The property was originally worth the loan amount, but housing values have dropped in Pinellas 'absolutely without question,' Doyle says. 'There's an unprecedented level of inventory.'"

"In 2002, Hattie and Jerry Jones bought a house in the Port Tampa area with a Fremont mortgage at 8.9 percent. On his Social Security and her modest wages as a nurse's aide, the Joneses can barely make the $603 monthly payments, which don't include taxes or insurance, and keep up with their other bills."

"Mounting debts forced the couple into bankruptcy court two years ago. They are determined to hang on to their home, even though they realize they would have been far better off renting."

"'I don't want to walk away, but I sure feel like it,' Hattie Jones says. 'Buying a house is not really for people who don't have money.'"

From Bloomberg. "The experience of Beth and Fabrizio Faieta, who have bought five homes in the Fort Myers-Naples area over the past few years, provides a tale of what happens when home prices sour."

"When the Faietas arrived in the Fort Myers area from Massachusetts 2 1/2 years ago, homes were in high demand in the Sunshine State. 'We had to put in offers the same day we saw them or they were gone,' says Beth, who was a part-time real- estate agent in Massachusetts."

"Although they have had no problem renting the Bonita home, with the slack market, they have had trouble selling it on their own. They recently signed on with a local real-estate agent and have reduced the asking price of almost $400,000 to $359,900."

"'We purchased the house with the thinking that we would like to keep it long term,' Beth says. 'I am not happy to sell it. I am also not happy that we are putting our other properties up for sale.'"

"Within sight of the Faietas' property are three similar homes for sale. According to the Naples Area Board of Realtors, there are 11,000 houses on the market, an 18-month supply, and more than 2,900 homes under construction in neighboring Lee County."

"Doug Brunner, a real-estate agent in Bonita Springs, says: 'Two years ago, it was common to see sales contracts written at 90 percent of the original list price. Now it is common to see listings reduced by anywhere from 20 percent to 33 percent before an offer is made.'"

The Herald Tribune. "Steve Noriega and Robert Byrne had a vision for taking laid-back, beachfront properties to the next level of luxury and sophistication. They convinced more than 30 individuals and 20 banks to help them pull it off."

"All told, Noriega and Byrne borrowed $43 million, using $26 million of it to buy two dozen properties from Anna Maria Island to northern Longboat Key. They then submitted plans to build 33 condo units and 15 homes."

"Five years later, all they have to show for their grand vision is a partially constructed luxury home, four duplex apartments, a Chapter 11 bankruptcy filing citing $33 million in unpaid debts and a collection of angry investors."

"'I have never been as disappointed in a person in my life," said Patricia Hart, a retired schoolteacher who mortgaged her house to invest more than $500,000 with Byrne. 'He portrayed himself as a dear friend, and as far as we knew he was on the up-and-up.'"

"Paul Collins, now an agent in Sarasota, helped Byrne buy 25 units in Bradenton's River Club condo in 2000. Collins forfeited his commission with the understanding that he would make much more when the units were resold."

"'I was foolish enough to think I would get paid,' Collins said after Byrne sold the units without him. 'In the end, I was left with the impression that he was not very trustworthy.'"

"Southwest Florida community bankers say the monumental loan problems faced by Coast Financial Holdings should not reflect poorly on community banks in general."

"Nevertheless, Southwest Florida's 21 community banks do have something in common with Coast: Their noncurrent loans and loan loss reserves have risen sharply over the past year."

"Southwest Florida's 20 community banks, not including Coast, reported a 595 percent increase in noncurrent loans, from $4.1 million December 2005 to $28.5 million in December 2006, and a 43 percent increase in money set aside to deal with future loan problems, from $29.3 million to $41.9 million."

"'Real estate lenders became intoxicated with the market,' said Jody Hudgins, who heads up Florida banking operations for Pennsylvania-based FNB. 'Now they've been sober six months, but problems are starting to show.'"

"Community bankers say those loan problems might worsen this year because of the continued softness in the economy."

"What is more, profits for the 20 area community banks excluding Coast are likely to fall in 2007. 'We are going to see continued pressure on bank earnings,' said Community Bank of Manatee Chairman Bill Sedgeman. 'Loan loss reserves will increase. That's inevitable.'"

"Then there's the problem of the inverted yield curve. 'Banks historically make money by issuing relatively short-term CDs and lending the money out through longer term loans,' said Steve Jonsson, CEO of Bradenton-based Flagship National Bank. 'But we can't do this as profitably now because short-term interest rates are higher than long-term rates.'"

"Community bankers say the reason certain banks are having loan problems and others are not has to do with who they lend to. Take Port Charlotte-based Peninsula Bank. Three of its problem loans, totaling $1.7 million, were made to James Russell Crain, who has defaulted on millions of dollars in loans over the past decade."

"Thanks in part to Crain, Peninsula's noncurrent loans rose 1,827 percent, from $275,000 in December 2005 to $5.3 million December 2006."

"The Bank of Commerce's loan problems are also largely connected to a single borrower, serial condo converter Warren Hickernell. Hickernell took out four loans from the Bank of Commerce between July 2004 and December 2005. He then used the money to convert barrier island motels and Sarasota apartment buildings into condos or condo-hotels."

"But the market for condo conversions dried up in 2006 and all four of Hickernell's loans are now in default. As a result, the Bank of Commerce's noncurrent loans rose 1,896 percent in 2006."

"Community bankers predict an increase in problem loans in the year ahead and a decline in profitability. '2007 will be a tough year,' said Flagship's Jonsson. Community Bank's Sedgeman agreed. 'I'm concerned for our industry.'"

"Auctions have become a more familiar phenomenon in Southwest Florida and the state as a whole with the cooling housing market. Some of the trend is an outgrowth of owners who need to move properties quickly, while another driver is banks auctioning properties after foreclosure."

"Marsha Wolak's first area 'mega-auction' is scheduled at the Sarasota Hyatt on April 15. There will be more than 30 properties up for bid, including several multimillion-dollar luxury homes. 'We do take ordinary properties,' Wolak said. But the business also takes 'sellers who need to sell in this difficult time, too.'"

"'We also specialize in short sales, which is when the bank takes less than the mortgage due, to close the sale in a market like this,' she said."

From CNN Money. "The once red-hot Florida housing market leads the nation in delinquencies, according to RealtyTrac."

"There were more than 19,144 properties in some stage of foreclosure in February in the Sunshine State, up 63.5 percent from January and nearly double the number a year earlier."

The Naples News. "Tuscany Reserve is a little less exclusive. Built for affluent second home buyers, the luxury golf course community in North Naples has been repositioned to offer more homes at a lower price, reflecting a tougher market in Southwest Florida."

"When the developer, Bonita Springs-based WCI Communities Inc., conceived the project, it expected to sell homes for $2 million to $5 million, with golf memberships in the range of $200,000."

"In the fourth quarter, WCI reported a rare quarterly loss and $118.3 million in impairment charges. The charges included an $84.9 million write down for Tuscany Reserve, reflecting a market loss in value in the community."

"'The community never really gained traction,' WCI's CEO Jerry Starkey said."

"'Basically it's a result of the market. The market was telling us that this community needed to be more reasonably priced,' said David Fry, chief operating officer for WCI's traditional homebuilding division."

"The average selling price in the community was more than $2.5 million, he said. Now, it's $1.5 million, reflecting the new housing options WCI is offering. 'People can get into the community for less than $1 million,' Fry said."

"In the first seven weeks of marketing the new products, Tuscany Reserve saw 25 percent of the traffic that it had all of last year."