The Orlando Sentinel reports from Florida. "A federal bankruptcy court this month approved the sale of 122 acres that were once planned for vacation villas marketed primarily to British investors. Starting in 2006, investors started filing complaints and suing British American Homes, claiming the Florida company took their deposits but didn't deliver the homes. The development was marketed as a vacation haven in the booming Four Corners area, where signs for vacation homes dot U.S. Highway 27."

"'"I was in England three weeks ago. A lot of these folks mortgaged their house to come up with the down payment. Some of them are retired. It's not easy for them,' said attorney Nick Bangos, who represents about 106 investors."

The Palm Beach Post. "The three women phoned Rodney McGill in hopes that he'd teach them how to get rich in a difficult real estate market. McGill seemed a bona fide success. He drove a Rolls-Royce, hosted a radio show and was pastor of New Hope Outreach Center in Jensen Beach. His wife, Shalonda McGill, was a mortgage broker. The McGills bought four homes in Martin and St. Lucie counties by submitting fraudulent loan applications, then flipped the properties to clients for outsized profits, investigators said."

"Investigators said the McGills in June 2006 paid $210,000 for a home in Jensen Beach, according to property records. Three months later, they sold the property to Sharon Schofield for $365,000 - a 74 percent increase at a time when home values were falling."

"'People thought they were getting involved in a real estate investment where he was going to mentor them,' said Detective Ted Padich of the Florida Department of Financial Services. 'What (the McGills) did was simply sell them homes that they already owned.'"

From TC Palm. "The developer of the large community on Michael Creek Drive plans to build the luxury waterfront subdivision despite a slump in the Treasure Coast housing market. 'Right now anything that is on river or on the water is stratospheric in South Florida, even with the way the market has been going,' said Cary Glickstein, owner and president of Delray Beach-based Ironwood Properties Inc."

"Ironwood is also developing The Antilles in Vero Beach. Recently, Virginia-based Premier Real Estate Auction sold 19 units during an auction conducted at the community's clubhouse. The most expensive unit sold for $385,000 and least expensive for $320,000 in addition to a 10 percent buyer's premium."

"Homes at the ritzy subdivision were selling for upwards of $700,000 during the height of the housing boom."

"'We thought that was a successful event,' Glickstein said."

"Foreclosure rates continued to escalate across the Treasure Coast in August, according to a RealtyTrac report. The study shows 1,661 homes in Martin, St. Lucie and Indian River counties entered some stage of foreclosure in August. That was more than double the 816 recorded during the same month a year ago."

"'The main problem here is that people are finding themselves upside down and when they owe much more than what the house is worth - that triggers a lot of foreclosures,' said Brad Hunter, director of West Palm Beach-based Metrostudy. 'Why continue to pay on something when it's not worth what you're paying for?'"

"Scott Wingfield, president of the Realtors Association of St. Lucie County, said he has brokered the sale of several foreclosed properties recently."

"'A lot of these properties are spec homes, properties that have never been lived in,' Wingfield said. 'The lenders are being very aggressive with pricing because they don't want them on the books anymore.'"

From Florida Today. "Dark clouds of reckoning hung thick over Wall Street on Monday, as credit woes plagued two storied investment names: Lehman Brothers Holdings Inc. and Merrill Lynch & Co."

"For consumers, 'if you're credit is a little shaky, it's bad news for you,' said David Denslow, an economist at the University of Central Florida. 'If you're credit is sterling, I don't think it will affect you a lot.'"

"With the collapse of Lehman Brothers, 'people will be wondering: Who is next? It will become more difficult (for Wall Street) to raise capital, which creates a self-fulfilling thing' with financial fallouts. 'Now that housing prices are falling, nobody knows how to value' mortgage portfolios, Denslow said. 'What's their value? Nobody knows.'"

The Sun Sentinel. "While unscrupulous loan brokers were defrauding Florida home buyers for millions, the state Office of Financial Regulation failed to order federal background checks and fingerprint scans for people applying for mortgage licenses as required by state law, Gov. Charlie Crist's chief inspector general, Melinda Miguel, said in the report released Tuesday."

"While regulators were 'asleep at the wheel,' as one legislator put it, Florida racked up the highest home-loan fraud rate in the country - twice the national average."

"In addition, the maximum $5,000 penalty for mortgage fraud is too small, the report said, noting that the illicit profit from a single fraudulent home sale often far outweighs the fine. It urged the Legislature to increase those penalties."

"'I think we have to take those recommendations and put them into action,' Crist said Tuesday."

"The inspector's report came after recent stories in The Miami Herald showed more than 10,000 people with criminal histories, including convictions for money laundering and cocaine trafficking, were allowed to sell home loans during the real estate boom from 2000 to 2005."

"The next target should be the unregulated loan originators, said Sen. Bill Posey, who chairs the Banking and Insurance committee. 'From what I understand, those are the guys who really pulled the most shenanigans,' he said."

The Miami Herald. "The investigation, carried out by the Inspectors General of the State Cabinet Offices, concluded the state's regulatory system was 'insufficient to protect the people of the state of Florida.'"

"The Herald's series led to the forced resignation of Commissioner Don Saxon, who had overseen the agency since 2003. Saxon said last month he hoped the report would vindicate his leadership of the agency. When asked Tuesday if the audit had done so, Crist responded with an abrupt 'No.'"

"Saxon, who is to step down in two weeks, was on vacation and didn't return repeated calls for comment. Investigators said the agency functioned without clear guidelines, making up rules as it went along and operating at times on wrong interpretations of the law."

"'In some instances, the office was not complying with existing governing directives,' the report states."

"''There was no enforcement mentality at OFR, and the report bore that out,' said Chief Financial Officer Alex Sink, the first elected leader to call for Saxon's ouster. She added that the agency needs a 'fresh set of eyes and new leadership.'"

"Auditors found that state regulators failed to conduct federal background checks or submit fingerprint cards of the applicants to the Florida Department of Law Enforcement until March of this year -- just days after The Herald made a series of requests for the criminal histories of mortgage brokers."

"The auditors found the agency was relying on birthdates and Social Security numbers to do background checks, leaving fingerprint cards -- crucial to determining criminal histories -- in office files, unused."

'The auditors wrote that Saxon said he was 'not aware of the strict language' of the law and 'did not believe' the Legislature meant for him to immediately implement the federal background checks required by law in 2006."

"The Miami Herald found 88 former federal criminals were licensed by regulators, including former bank robbers."

"Auditors found that, in some cases, the agency failed to warn law enforcement of crooked brokers and boiler rooms, and that penalties imposed on bad brokers were often inadequate and far lower than proceeds from a single illicit mortgage transaction."

"The report also noted that telephone complaints about bad brokers were not recorded by state agents or even acted upon."

"Separately, the report found that loan originators -- the largest segment of mortgage professionals in Florida -- do the same work as mortgage brokers but aren't licensed. Saxon told auditors that licensing loan originators would be next to impossible because of the 'influence of the industry.'"

"But industry leaders in Florida told The Miami Herald they had asked Saxon's office in 2002 and 2006 to license loan originators -- but regulators refused."

"The Herald obtained agency e-mails that showed top leaders of Saxon's staff opposed the licensing of loan originators and, in one case, even removed a provision in a legal draft to license them."

The St Petersburg Times. "The road to ruin for Lehman Brothers, one of the nation's oldest and largest investment banks, began in places like Units 404 and 418 of Boca Ciega Resort & Marina. At the peak of Florida's real estate boom in 2006, Lehman's subprime subsidiary, BNC Mortgage, loaned a total of $512,000 to Edwin L. Jackson to buy the two condos. They were among 14 condos that Jackson bought in the same complex."

"Lehman pooled them with other loans and sold them as securities to pension funds, mutual funds and individual investors, all eager to cash in on the seemingly unstoppable rise in real estate prices."

"For a few heady years, loaning money to borrowers like Jackson and pooling the loans made Lehman Brothers one of Wall Street's biggest players in the subprime mortgage boom. Then, as Jackson puts it, 'rents fell off, sales fell off and the economy fell off.'"

"As Lehman's value plunged, so did that of Units 404 and 418. Mortgaged for $256,000 apiece, they are now assessed at just $172,400. With two DUI convictions and a suspended license, Jackson gets around by bike these days."

"Before the mid 1990s, local bankers took in deposits, loaned the money to home buyers and collected principal and interest until the mortgage was paid. Mortgage-backed securities consisted mostly of loans to borrowers with good credit."

"Then, investment banks like Lehman started pooling riskier loans made to borrowers with shaky credit. Pooling the loans diversified the risk while providing the high yields sought by investors. The company also led the push by investment banks to buy their own lenders so they would have direct access to consumers."

"Though Lehman denied it, former BNC employees said that the company falsified pay stubs, tax forms and other loan information - 'anything to make the deal work,' as one told the Wall Street Journal in 2007. Yet BNC and other subprime lenders operated largely beyond the reach of regulators."

"'The belief is that these are really smart people and you'd think they'd be dotting the i's and crossing the t's,' says Scott Brown, senior economist at St. Petersburg's Raymond James."

"Even as rentals slowed and the sales market dried up, Jackson's expenses on his Boca Ciega condos continued to climb. On Tuesday, six of his 14 units were vacant, including Unit 418. All the condos are now in foreclosure, though Jackson says he's 'trying to work things out.'"

"He says he has short-sale contracts on all 14 units. And with Lehman Brothers in bankruptcy, it could be months before anything happens with Jackson's loans."

"Like most borrowers, he didn't know that his mortgages had become part of a 'mortgage-backed security.' He had never heard the term before Tuesday nor has he ever spoken with anyone from Lehman Brothers."

"'What do I have to do with all this?' he asked, excusing himself as walked past the resort's deserted pool area into its vast, nearly empty parking lot."