Hard times for Hollywood (Florida)

http://www.guardian.co.uk/business/2008/aug/08/subprimecrisis.useconomy


With the US housing market in freefall, Jonathan Franklin visits the former Florida boomtown where repossessions are at an all-time high, pawnshops are thriving and residents predict an economic meltdown to rival the great depression
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Jeb


'You feel bad. You don't want to take their wedding rings from them - that's their memories and everything," says Michael Bruce from behind a row of thick steel bars. "But they need the money and that's what we are here for."

Bruce holds out a black velvet jewellery tray. Each row holds a dozen wedding and engagement rings: big diamond, little diamond, stylish or gaudy, he has dozens. "When they take the ring off their finger, they get all choked up. It's just something you got to deal with ... that's just the way the economy is - it's trash."

Jeb

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Junior's pawnshop sits alongside a faceless strip mall, across the street from a cement fortress - the sheriff's office - 30km north of Miami's South Beach. Inside a steady stream of people come in to sell off their possessions. There's a stack of palmtop computers, brand new Bose speakers and so many Guess watches that Junior won't take them any more. "I get the guy who drives up in the Bentley, and the people who walk in. No one has cash."

Jeb

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The collapse of the local economy is obvious along the palm-shaded streets of Hollywood, Florida. Instead of "Welcome to Hollywood", the first sign a visitor now sees is a bright yellow sign stuck into the flowers. It reads: "Sell Your House, Fast Ca$h 954-294-5420."

Answering the phone at that number is Ricardo Morales, 39, who set up his own website, ricardobuyshouses.com, and has been scooping up properties for as little as 25% of their listed value. "The banks have properties that are listed at $240,000 <£123,000>, but now they are dumping them for $89,000 <£46,000>. That seems to be their favourite price now - $89,000 and we are talking a three-bedroom, four-bath home in a nice area. The banks are dropping the prices like crazy."

Jeb

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Nowhere has the economy been more crushed than southern Florida, where Hollywood sits. As developers, speculators and investors saw year after year of 20%-plus gains in property prices, money poured in. Banks joined the party by offering a novel kind of loan - "no documentation". Applicants would simply be asked by a bank's loan officer, "How much do you earn?" and "Have you ever been bankrupt?" and most important "How much money do you need?"

"There was a lot of fraud. People would lie about how much they earned ... Whatever you put was true. You put down your salary and they gave you $1m and said, 'Go buy a house,'" explains Carlos Justo, a broker who has worked in property for 30 years. "I had a client - he's a banker - and he said, "Carlos, my 13-year-old son could get a mortgage. He has a social-security number and a tax ID. If he had applied, he could have gotten $1m."
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thank Jeb