The Miami Herald reports from Florida. "Since South Florida's raucous real estate party ended, the hangover has taken different forms, sales plunging, foreclosures rising, lawsuits flying. Now, a Hialeah condo conversion company has gone bankrupt in one of the biggest bankruptcy cases yet to come out of the soured housing market. Puig, a private condo conversion company in Hialeah, is seeking protection from creditors who claim they were stiffed for nearly $120 million."

"The case may be one of many more to come, or so think the law and accounting firms that have launched or beefed up distressed property divisions for months. 'Unfortunately, I think the ball is just beginning to roll,' said Bowman Brown, a veteran attorney in Miami."

"All told, the company converted and sold some 19 projects with 1,400 units. Meanwhile, another 2,900 units were in the works. By 2006, the housing boom was fizzling fast. Yet the company had taken out big loans to buy new apartments for conversions. It became harder and harder to make a sale, and harder to make loan payments to lenders."

"In late May the company entered bankruptcy, seeking to end the blood-letting. 'In the real estate business, everything can't keep going up and up and up,' said Allen Greenwald, a Miami developer and real estate investor who is among the creditors owed money by Puig. 'But the market turned so fast. Unfortunately, this was a very fast and severe downturn.'"

"Now, (the chief restructuring officer) must unload the units Puig could not sell to pay creditors like Greenwald back. He has to sell about 2,000 condominium units at a price low enough to entice buyers, yet high enough to pay creditors back."

From TC Palm. "Even though the housing bubble had burst months before construction began, Janos Gyory was optimistic the new homes his company was building would sell for nearly $300,000 each. Most of them didn't."

"This Saturday the remaining 14 finished homes will be auctioned, with bidding starting at $190,000. 'We were always optimistic that it is a good product," said Gyory, president of NGG Point. 'But we are still paying interest to the bank and need to move it somehow.'"

"Auctioneer George Richards expects the homes to sell between $195,000 and $200,000, roughly two-thirds of the original asking price."

"Gyory's company purchased the nine-acre parcel for $230,000 in 2003 and construction began in early 2006, months after the start of the national downturn in the housing market. 'We thought there was still people who might be interested,' Gyory said."

"Gyory is still optimistic about the new home market of St. Lucie County. He is in the early stages of developing a 44-unit subdivision in Fort Pierce. 'We believe the market will turn around by the time we are building there,' Gyory said."

The St Petersburg Times. "The official-looking notice appeared in his mailbox last year. To Denith Harrigan, the promise of an interest rate as low as 1 percent was too good to ignore. Disabled and on a fixed income of $2,100 a month, Harrigan could finally pay off credit card debts and fix his leaky pool."

"Now just a few months into his new mortgage, Harrigan is in serious risk of losing his house. In less than three years, his payment could grow to equal his total income."

"'I got into something I had no intention of getting involved in,' said Harrigan. 'I believe this should be against the law.'"

"For Harrigan, the lower interest rate initially decreased his mortgage payment from $1,495 to $1,005. But if he covers only the minimum payment, his principal will grow by about $1,000 a month, and in less than three years his payment will equal his total income."

"Brokers and lenders alike are quick to point out that option ARMs fill a need. For investors, borrowers with fluctuating incomes or people with a lot of home equity and an immediate need for extra cash, the mortgages work."

"'It's a pay-now-or-pay-later situation, and ultimately it's always the customer's decision which is best for them,' said Patrice Yamato, president of the Florida Association of Mortgage Brokers. Yamato acknowledged that people have misused option ARMs and some brokers and lenders have outright lied that the low interest rates were fixed."

"The broker, Harrigan said, didn't mention the stiff prepayment penalty or make clear that he could pay the minimum for only so long before triggering a monthly payment of more than $2,000, leaving him only about $100 to live on."

"While Harrigan regrets getting the mortgage, Premier Mortgage Funding says it was a good deal. Harrigan was able to pay off $12,000 in credit card debts and got an extra $6,000 in cash."

"'I see a huge improvement for this gentleman,' said Peter Forcey, sales manager of the Independence, Ohio, branch that sold the mortgage. 'It looks like a pretty strong loan.'"

"Forcey said Premier often directs customers to less risky mortgages, but added that consumers need to take some responsibility for their decisions. 'We pride ourselves on the level of disclosure,' he said. 'There has to be a benefit for the client or it's gone.'"

The News Press. "Collier County is No. 1 and Lee County is No. 6 on a nationwide list of housing markets where prices are most likely to fall during the next two years."

"'I’d probably agree' that prices are headed down in Lee County, said Joe Cameratta, CEO of Cleveland-based Cameratta Properties, which built High Point Place condominiums in downtown Fort Myers and is building the First Street Village residential/commercial project nearby."

"LaVaughn Henry, director of economic analysis for PMI, said the forecast is based largely on how sharp past price swings have been in a particular market. 'Florida’s had a high probability assigned to it because historically it’s had a high price volatility. What goes up will, at some point, come down.'"

"Lee County’s housing market is a shadow of what it was in the boom years of 2004 and 2005. Since December 2005, when the median price of an existing-single-family-home resale reached an all-time high of $322,300 according to the Florida Association of Realtors, both the number of sales and the pace of construction have dropped sharply."

"The median price was $283,200 in April, off 12 percent from the peak. Meanwhile, the number of single-family permits pulled by developers countywide fell from 1,422 in December 2005 to 424 in May, down 70 percent from December 2005."

"There’s an unsold inventory of about 15,000 homes in Lee County, about four times what it was a year ago."

From CBS 4. "When it comes to mortgage fraud, Florida ranks number one in the nation with Miami Dade coming in fourth among all metropolitan areas nationally. A survey found the most common mortgage fraud scheme is South Florida involves a buyer receives a property loan above for thousands above the appraised value and then the seller kicks back cash at the closing."

"'There are so many people profiting off of this,' said a local realtor who did not wished to be identified by CBS4. This realtor told CBS4's Evan Bacon he became involved in a fraudulent deal this past spring."

"'I was approached by a group that I did not know,' said the realtor, 'and they asked me directly to ask my seller if I could raise the price of my unit a substantial amount, almost double.'"

"The realtor said the caller then offered to buy the condo for what the seller was asking if the seller agreed to increase the sale price by more than $200-thousand and then give the extra cash back to the buyer at closing. The realtor told CBS4 on the day of the closing the sale documents had been changed to reflect a new buyers name and a much higher price."

"'It's a very typical scheme in South Florida,' said Miami Dade Police Sgt. Richard Davis, 'that is now spreading all over the country.'"

"Fraud investigators say if this type of scheme continues it's going to get to the point where lenders will pull out and not lend any money. 'When I see mortgage commitments where someone makes $28-thousand a year and they are qualifying for a $900-thousand mortgage, that's not normal,' said Nancy Hogan with the Florida Real Estate Commission."

The News & Observer from North Carolina. "Crosland, which was planning to sell 179 condominiums near Glenwood South, will rent the units instead, a decision that illustrates how surging interest rates could dampen downtown's growing condominium market."

"'It's a safer opportunity for us to be the only rental when everybody else is condominium,' said David Ravin, a senior VP at Crosland."

"When the project was approved in April 2006, the Charlotte developer offered some units for rent and some for sale. But demand from potential buyers was so high that it decided early this year to sell all the units."

"Since then, however, mortgage rates have spiked. That causes Crosland to worry that, by the time the project is complete, late next year, buyers will have bought elsewhere, or abandoned plans to buy."

"The number of condos in Raleigh's core is expected to double to nearly 1,000 within two years. By 2011, there could be more than 2,000. 'Inevitably, you're going to see a timeout in downtown for-sale product,' Ravin said."

"Crosland's decision is not the first sign of condo conservatism. Others have abandoned, delayed or shrunk downtown condo plans."

"The company has refunded deposits for about 80 condo reservations, but will allow the prospective buyers to get back in line if the sales campaign is revived. Meanwhile, renting the units will get the project going. As Ravin points out, 'A project that doesn't get built isn't profitable.'"