The Washington Post reports on Michigan. "The housing bubble of recent years has burst and home prices are under pressure in many parts of the country. States like Michigan and Ohio, struggling with their particular economic problems, illustrate just how bad things could get in the housing sector."

"Janet Laitis leaned on a chain-link fence in her front yard and pointed to the homes on her block that lenders have seized in just the past two weeks. 'There. There. There,' said Laitis, pointing across the street, down the street and then to the modest ranch house next door. 'This neighborhood is deteriorating before my eyes.'"

"Three years ago, Brian Minjares left his job at a financial services firm to start his own practice with a partner in the Detroit suburb of Southfield. Minjares took out a home equity line of credit to finance the business. At the time, his house was appraised at $350,000 and he owed $275,000, he said. The bank gave him a loan equal to 100 percent of his equity."

"As the housing crisis worsened, the value of his home dropped to $260,000. Minjares could not afford to sell it because he owed more than it was worth. He could not afford to keep it because, as the rates on his loans adjusted, his monthly payments jumped to $3,000 from $2,100."

"He fell behind on his payments and the bank foreclosed on his Colonial in Flat Rock, not far from Detroit. 'You just have to cut your losses and run,' Minjares said. 'You have to take into consideration your marriage and your health and you say to yourself: 'It's just a house.'"

"Max, an engineer who spoke on condition that his last name not be used because he is embarrassed by his situation. Max bought a condominium in the Detroit suburb of Plymouth using a traditional fixed-rate mortgage more than five years ago. But three years later, his firm took away company cars from its workers, hiked insurance premiums and cut raises and bonuses, raising Max's monthly living expenses and reducing his pay."

"Max responded by refinancing his condo twice. Though he did not realize it then, the second loan was adjustable. 'I wasn't even reading the paperwork,' said Max, who makes $106,000 a year. Weeks ago, Max turned in his keys to his lender."

The Oakland Press from Michigan. "Recently released U.S. Census Bureau population estimates indicate that over the last six years, Oakland County has seen nearly 50,000 residents pull up stakes and head to neighboring counties or other states."

"Chris Shoemaker, president of the North Oakland County Board of Realtors, said said the trend of clients looking for bigger homes and more property elsewhere might be even more pronounced if it were not for a sluggish housing market."

"'We do have problems selling the houses here so those people can move,' Shoemaker explained. 'I don't feel it's a problem in Oakland County specifically. I think it's just the market generally.'"

The Daily Press from Michigan. "Several Livingston County communities are seeing a significant spike in boards of review appeals this year — signs of a struggling housing market and struggling state economy. Boards of review are set up to allow residents to contest the assessed value of their homes."

"Green Oak Township saw the largest increase in assessment appeals this year at 640, up from 200 last year."

"Township Supervisor Mark St. Charles attributed the majority of his community’s appeals this year to a 13 percent increase in the township’s overall state-equalized value. 'We’ve been kind of the bright spot of the building economy and the economic engine in the state as of recent,' St. Charles said of Livingston County. 'We are now seeing sales declining, building permits declining. That is catching up to us here.'"

"Unadilla Township heard 114 appeals this year, compared to about 30 last year. This year’s appeals represented 5 percent of taxable properties in the township, Supervisor Jim Peterson said."

"'The main frustration was they couldn’t sell the home for what we’re assessing them at,' Peterson said."

The Star Tribune from Minnesota. "The subprime mortgage crisis that has gummed up the housing sector nationwide doesn't carry a 'Made in Minnesota' tag. But it almost deserves that label."

"Minnesota lenders, from Norwest (now Wells Fargo) and Green Tree to Metris, were pioneers in finding ways to cater to strapped borrowers, creating the lending template that others copied."

"History suggests...that no matter how many times subprime lenders blow up, new ones will rise here, unable to resist the temptation of lending at double-digit interest rates."

"'It all comes down to risk and reward,' said Jim Campbell, a longtime Norwest and Wells Fargo executive. 'Taking high risks gets you a lot of reward. It kind of feeds on itself.'"

"'People get kind of greedy,' said Andrew Winton, chairman of the finance department at the University of Minnesota. 'They don't remember the past. They keep thinking, 'It's different this time.'"

"What strikes Campbell about today's subprime mess is that some of it stems from the lack of cyclical nature of the business and the lack of enough experienced people who've seen past problems in the business and can appropriately price for risk."

"'You think you can do no wrong,' Campbell said. 'Things tighten up. Everything gets difficult. 'We are not going to do it anymore.' People retire. Then new people come in and think 'These are great opportunities.'"

"Subprime lenders such as Green Tree 'set up an accounting system that took in all of the payments on the loans under a present-value formula so that [they] could deliver rapid earnings growth,' said analyst Richard Bove."

"'If you look at Green Tree, they grew their portfolio very quickly,' Winton said. 'They were starting to put on loans that were likely to go under.'"

"Green Tree was the first to package loans into bonds and sell them directly to Wall Street investors. Today the mortgage-backed securities market totals trillions of dollars. The model encouraged subprime lenders to make risky loans because they weren't bearing the risk of default themselves, said Ben Crabtree, a Minneapolis-based analyst."

"'If they couldn't get the loans off their books, there would be less incentive to write riskier loans,' said Crabtree."

"Green Tree eventually admitted that it used aggressive accounting practices that inflated its profits by failing to predict how many loans would go bad or how quickly consumers would repay their debts ahead of schedule. In 2002, Conseco sold what was left of Green Tree."

"Metris Companies Inc. was another high-flying subprime lender in the late 1990s. The recession that followed the September 2001 terrorist attacks nearly bankrupted the company."

"Metris, based in Minnetonka, prided itself on its ability to determine which customers would pay their bills on time. 'The Metris model was a fantastic one,' said Al Gagano, who was the investor relations director at Metris. 'It was the first time in history a lot of people were given access to unsecured loans.'"

"But the Metris model couldn't withstand what happened after 9/11. Cash-strapped debtors stopped paying their bills, forcing Metris to take giant charge-offs to cover delinquent debt At the time, Metris CEO Ron Zebeck insisted the company was a 'healthy baby that's being thrown out with the bath water.'"

"Zebeck was eventually forced out, and the company was able to trim bad loans off its portfolio and return to profitability. HSBC eventually purchased Metris for $1.5 billion in 2005."

"'Subprime was never really tested at the time with a recession,' Galgano said. 'Now I guess we know.'"

"Gagano recalls one analyst in the late 1990s -- so confident that Metris could handle a recession that she titled one of her reports 'Bring It On.' 'I guess she got her answer,' he said with a laugh."