The St Petersburg Times reports from Florida. "'At first, as in all these gambling mania, everyone gained ... A golden bait hung temptingly out before the people and, one after another, they rushed to the tulip marts, like flies around a honey pot.' Charles Mackay, Memoirs of Extraordinary Popular Delusions and Madness of a Crowd (1843)."

"Doesn't it seem familiar? It did to me last week, driving through Royal Highlands and thinking back to three years ago, to May 2005, when demand for real estate in the Tampa Bay area reached its peak."

"Speculators were everywhere back then, of course, but nowhere in Hernando did their fever seem as much like a 'popular delusion' as in Royal Highlands, a 36-year-old subdivision that sprawls across northwest Hernando."

"'I always describe it as putting a ham bone in a pool of piranhas,' said June Gulbrandsen, owner of Windward Realty near Royal Highlands."

"Vacant parcels on the market for as little as $2,000 five years ago sold for 10 times that amount a year later. The following year, the average price for the 1,924 lots sold in Royal Highlands climbed to $38,386, according to the county Property Appraiser's Office."

"So who got stuck? The amateurs, especially those from out of state, who paid builders for houses that often depreciated more than $50,000 by the time they were completed, said Jeanne Gavish, a Land O'Lakes real estate broker."

"'Royal Highlands has loads and loads and loads of vacant houses,' Gavish said. 'It's like a vacant-house graveyard.'"

"The speculation-driven market pushed up property taxes. It led to the current housing collapse in the county - where only 140 permits have been issued this year - that dragged down nearly every other sector of the economy."

"'Hundreds who, a few months previously had doubted there was such a thing as poverty in the land, suddenly found themselves in possession of a few bulbs nobody would buy (and) the cry of distress resounded everywhere.' - Mackay."

"For April, Florida led the nation for the largest month-over-month drop in employment levels. From March to April, the state lost 25,300 jobs. Michigan, meanwhile, shed 18,600 positions over the month."

"'It's certainly not a position we're used to,' said Rebecca Rust, economist with Florida's Agency for Workforce Innovation. 'We've been a leader in job creation for most of the last decade because of the construction boom. When you're up so high, you have farther to fall.'"

"Florida actually had the highest number of month-over-month job losses five times since January 2007."

"Sean Snaith, an economist with the University of Central Florida...said it wasn't helpful to get hung up on Florida's sudden appearance in the loser's column with Michigan."

"'There are some real structural problems affecting that state and they've been in dire straits much longer,' Snaith said of Michigan, where unemployment is 6.9 percent. 'Our problems are more a cyclical function of the insane real estate market we've been in. Once we get out of 2008, things will start to brighten.'"

The News Press. "In Lee County, 17,300 of 245,405 homes are financed by subprime loans. Carol and Robert Rommel bought a condominium in Bell Tower Park in south Fort Myers in September 2005 for $390,000 with a subprime loan. As prices dropped, they decided they could afford a house in Reflection Lakes."

"But the condo didn't sell and now they're struggling to cover two mortgages. They can't even refinance the condo loan because they'd have to pay a $10,000 early-out penalty, common under subprime terms."

"'What we're getting is a lot of them come through the door that there's not enough equity and there's nothing we can do,' said said Vincent Patti, VP of Fort Myers-based First Capital Lending."

"Their best bet is to throw themselves on the mercy of the lender, Patti said. 'I have seen a lot of the lenders stretching the terms for the reset,' he said. 'If it looks like it can be done, they'll extend the two years or three years. It's happened to me personally on an investment property.'"

"For many, going to the bank would be an exercise in futility, said Robbie Roepstorff, president of Edison National Bank in Fort Myers."

"Edison and most other local banks didn't do subprime loans during the boom - it was the big banks like Countrywide and Bank of America - and the local banks aren't getting any demand to refinance them now, she said."

"'When banks impose conservative, reasonable underwriting standards on someone who got into a subprime mortgage when fog on a mirror qualified you, and so many were self-employed and now are unemployed, independent contractors, that's the kiss of death,' said said Charles Costello, a real estate and mortgage broker in Fort Myers."

"One bank, he said, recently asked a prospective lender for three years of pay stubs to prove a steady income."

"Getting the lender to give you a better deal can be problematic as well, Costello said, because most subprimes were bundled up into mortgage-backed securities by Wall Street and sold to investors."

"'It's difficult to modify a loan because nobody has the authority to do that,' he said. 'Because of the securitization, they're sliced and diced, a piece owned all over the globe.'"

"The Rommels haven't given up on selling their condo. 'We're willing to bring money to the table,' Carol said. 'We'll take it out of our savings.'"

The Miami Herald. "Eastern Financial Florida Credit Union has survived hurricanes, recessions and the demise of its namesake airline. But now bad loans made during the housing boom have South Florida's largest credit union reeling."

"A $30 million loan for a waterside West Palm Beach condo project that never got built and went into foreclosure. The credit union lost $68.9 million last year -- financial results that one trade journal called the worst ever for the industry. Eastern's president and CEO resigned."

"A banking industry ad campaign highlighting the losses at Eastern and other credit unions helped scuttle a federal deregulation bill this month that would have further erased the distinctions between banks and credit unions."

"'This will become the poster child for why credit unions should not be allowed to stray far from their traditional lending powers,' said Miami bank analyst Kenneth Thomas."

The Sun Sentinel. "At the end of April, almost 41,000 condos were listed for sale in Palm Beach and Broward counties, according to data from Coldwell Banker Residential Real Estate. Based on the current monthly sales pace, it would take roughly five years to sell all those condos if no new units came onto the market. Experts point to a huge number of still-unfinished condos that will keep a lid on prices for at least a year."

"At the end of the first quarter, there were more than 30,000 unfinished condos in South Florida, 80 percent of them in Miami-Dade County, according to Metrostudy."

"During the housing boom of 2000 to 2005, speculators bought condos at pre-construction prices and watched the units rise in value before having to close on the deals. But not enough long-term owners bought condos, leaving investors on the hook with empty units."

"Some of the investors have tried to use loopholes in the sales contracts to get out of closing on the deals, while others are falling into foreclosure. And owners living in the condos are tiring of expensive maintenance costs and special assessments."

"'I used to show buyers six condos; now I show them 20,' said Elaine Russell, a broker associate in Boca Raton. 'They want the very best deal. If sellers are not motivated, I tell them, 'Don't even bother to list it.'"

"Two years ago, a two-bedroom condo at One City Plaza in West Palm Beach would have fetched $400,000 or more. Today, prices are in the $280,000 range. 'That's just the list price," said Kendra Radicchi, a West Palm Beach agent. 'What they sell for is typically much lower.'"

"In Fort Lauderdale, condos at Las Olas Beach Club that were selling for more than $1 million now are going for $750,000 to $800,000."

"A townhouse on Northeast Second Avenue that was on the market in 2006 for $599,000 is listed for $214,500, a 64 percent discount. And a condo on North Ocean Boulevard that two years ago was listed at $899,000 is available for $479,900, a 47 percent cut."

"Some offers are 'almost embarrassingly low,' said Pompano Beach agent Randy Bates, president of the Realtor Association of Greater Fort Lauderdale. Insulted, owners reject the bids, only to field subsequent offers just as low, Bates said."

"One of his clients listed a three-bedroom Lauderdale-by-the-Sea condo for $1.4 million. The owner turned down several offers for two years before finally selling it for $1.05 million. Another of Bates' clients listed a Lauderdale-by-the-Sea condo for $799,000 two years ago, only to sell it recently for $550,000."

"'A lot of these units selling at bargain prices have been on the market for a year or two, and their owners are just now realizing that the market is not going to turn around,' Bates said. 'They figure they're better off taking the deal on the table, even though it's not the best deal.'"

The Orlando Sentinel. "More than 200,000 subprime mortgages were issued across the region from 2004 through 2006, the Sentinel analysis found. That is about three of every 10 mortgages made during the three years studied."

"Only eight of the top 100 U.S. census tracts with the most subprime loans in Central Florida are in low-income, urban areas such as Pine Hills and Azalea Park, according to the analysis. The rest are in suburban communities such as Avalon Park, Celebration, Winter Garden, Deltona, Poinciana and the Four Corners area near Disney World."

"The stampede to the suburbs, which resulted in about $30 billion worth of subprimes in a seven-county area, was triggered by Wall Street's desire at the time for high-return investments based on the high-risk mortgages, according to a former senior economist with the Federal Reserve."

"'There were just not enough people in inner cities to allow subprimes to grow into a really significant portion of the mortgage market,' said Anthony Pennington-Cross, the former Federal Reserve Bank of St. Louis economist."

"All seven counties in the region -- Brevard, Lake, Orange, Osceola, Polk, Seminole and Volusia -- ranked in the top third of Florida counties in the number of subprime loans issued from 2004-06."

"'There are too many' subprimes in Central Florida, said Larry Tobin, CEO of Orlando-based Fairwinds Credit Union. 'It is certainly not going to be this year that we will be able to work through all that. It is definitely going to be years.'"

"Martin and Linda Conroy bought a four-bedroom, three-bath home about three years ago in the Four Corners section of Lake County. Their lender was BNC Mortgage, a subsidiary of Lehman Brothers Holdings Inc., a global investment bank that during the housing boom was among the leaders in packaging subprime loans into securities for sale to big-time investors."

"BNC gave the Conroys a $300,000 mortgage. The retired firefighter and his wife say they don't know whether their loan is subprime, though it possesses many of the characteristics associated with one. 'I was under the impression it was a fixed rate,' Martin Conroy said of the mortgage."

"Not until adjustable-rate loans became a regular subject of news reports did the Conroys reread their loan documents and discover they had one. They quickly put their house up for sale, but not a single person has come to see it in six months, they say."

"One problem is that their home is sandwiched between a house already repossessed by its lender and another that has been vacant and for sale for about a year. The lender on the foreclosed neighbor was another Lehman Brothers mortgage unit that was renamed Lehman Mortgage Capital a couple of weeks after Lehman Brothers shut down BNC Mortgage."

"While waiting for a buyer, Martin Conroy has taken a part-time job as a bus driver at Walt Disney World to generate extra income. But this is not how the couple envisioned their Central Florida retirement."

"'What we really need to do is downsize,' Linda Conroy said. 'Have a smaller place and half the mortgage.'"