A simple narrative is often used to characterize the foreclosure crisis at the heart of America's Great Recession: While banks are at fault for approving risky loans, people who lived in the homes are as much to blame. ¶ Vanity Fair magazine calls American homeowners "infantile'' for living beyond their means. Financial pundits criticize them for splurging on swimming pools and three-car garages. A Treasury secretary takes his shot, accusing home buyers of signing mortgages they could never afford.
But a St. Petersburg Times analysis of thousands of foreclosures in Hillsborough County, which has one of the highest default rates in Florida, shows individual homeowners are getting too much of the blame.
The truth is that real estate speculators and revenue-hungry local governments bear just as much of the responsibility — and maybe more — for the collapse in the housing market.
In Hillsborough, for example, investors and flippers account for almost half of the foreclosures filed from 2007 to 2009. Their purchases greatly inflated home prices, laying the foundation for the bust to come.
And local officials helped them every step of the way.
Hillsborough commissioners approved huge housing projects in rural areas while waiving impact fees for developers. Tampa leaders green-lighted country club developments in far-off New Tampa, ignoring warnings about overbuilding.
As in overbuilt markets in Arizona, Nevada and California, many investors bought homes they never intended to occupy. And when the bubble burst, they couldn't afford to hang on.
Benjamin and Elizabeth Padilla are living in the aftermath.
In 2007, they paid $200,000 for a four-bedroom house in rural south Hillsborough. They still live in the home and make their mortgage payments on time. But all around them are empty houses, most of them bought by investors.
The value of their home has plummeted to $119,000. And neighborhood crime is on the upswing.
"We can't do anything to get out of here," said Elizabeth Padilla, 58. "If we sell, we have to come up with the difference between what we bought and what it's worth now, and we can't afford that. We're stuck."
Larry Pioli, 52, lives at the northern end of the county in New Tampa's upscale Grand Hampton development. He's a longtime developer and investor who has three houses for sale there. Two are in foreclosure.
Pioli blames others for his misfortune.
"I'm very disappointed in the mortgage companies, the banks, the government — everybody who let the market get out of control," Pioli says.
The dynamic isn't unique to Hillsborough. In Pasco County, speculators drunk on easy credit turned developments into ghost towns. In Pinellas County, high-flying home prices have cratered, dropping by one-third since 2006. Even Hernando County has been hit hard. Its foreclosure rate ranks near the top in the Tampa Bay area.
"So many people thought they could make a lot of money flipping,'' says Sean Snaith, a University of Central Florida economics professor. "They created their own demand for housing. Now we're left with an excess supply. We're in for a difficult time.''
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There is no denying that many Hillsborough homeowners got greedy during the boom. Some bought too much house for their income. Others used their homes as piggy banks, taking out second mortgages and lines of credit that left them buried in debt.
But at least 44 percent of the 11,967 foreclosures analyzed by the Times involved properties that didn't have a homestead exemption, a large tax break awarded to owners who use their home as a primary residence. These properties were likely purchased by investors or flippers, said Tim Wilmath, director of valuation for the Hillsborough County Property Appraiser's Office.
Their voracious appetite for homes, combined with low interest rates, rising home prices, and mortgages that required little documentation, sent developers scurrying to build houses, especially in the county's southern and northern suburbs. Land is cheaper outside cities. But only if taxpayers pony up millions of dollars to provide essential services, such as roads, police, water, schools and sewers.
And that's exactly what happened.
Despite warnings from hired experts and their own planners that suburban growth rarely pays for itself, Hillsborough commissioners approved project after project, promising each would pump tax dollars into the local economy. Meanwhile, they took numerous campaign contributions from the building industry.
Commissioners, in fact, welcomed so many developments that 50,000 approved homes are still waiting to be built.
Tampa officials weren't far behind. They created much of New Tampa in the 1990s by annexing chunks of cow pastures just east of Interstate 75. Arbor Greene, Cory Lake Isles, West Meadows, Heritage Isles and other communities sprang to life, promising varying degrees of luxury and prestige.
"It was all about the tax base," said Denise Layne, who did battle with the city as an officer of the Sierra Club.
Then-Mayor Dick Greco doesn't deny it.
"That land was going to be built on one way or another," he said. "If we didn't annex it, the city would have gotten absolutely nothing."
Perhaps the most egregious example is the building binge in Gibsonton, a south Hillsborough community best known for its tropical fish farms, trailer parks and itinerant carnival workers.
"We don't have good bus service," said longtime resident Jeanie Johnson. "We don't have the roads. We certainly don't have the jobs. Why would you put homes out here?"
Commissioners said Gibsonton was a slum and could be saved only by home construction.
"It's abominable to see the things these people have to live with out there," Commissioner Jim Norman said in 2000, when the board voted to waive all fees the government charged for new development there.
The generosity worked: Over the next six years, builders pulled 2,700 permits in the area — 32 times the number pulled in the previous five years.
Commissioners weren't making their decisions in a vacuum. Powerful landowners and campaign contributors were pushing them to waive the fees. One was Ralph Hughes, a longtime Republican power broker.
Before he died last year, Hughes made himself rich selling building materials to developers. Among his customers: two of the large subdivisions that had their fees eliminated by commissioners.
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Grand Hampton, once considered a crown jewel of New Tampa, was built for people with money. A guard screens visitors to the resident-owned streets. Two resort-caliber swimming pools, one for sunning and one for laps, sit side by side at a lavishly appointed community center.
Carriage Pointe, one of the new subdivisions in Gibsonton, was developed for the starter home market. No amenities here. A clubhouse, pool and fitness center were promised as far back as 2005, but the builder, Lennar, has yet to provide them.
The two projects, worlds apart geographically and demographically, have this much in common: speculators and foreclosures.
People began buying properties in Grand Hampton around 2005. At least 125 of its 800 homes have been in foreclosure.
Carriage Pointe also opened for business in 2005. Half of its 382 homes have had foreclosure actions filed against them.
"I thought it was pretty nice," said Frans Trisnadi, a California investor who read about Grand Hampton on the Internet, visited the area and bought two properties in late 2005 and 2006.
Unable to sell the homes, he let lenders foreclose on both this year.
At least a dozen Realtors bought homes in Grand Hampton. Many have since defaulted. Other investors include Tampa City Council member Joseph Caetano, former professional football player Dennis Lundy and restaurateur John Saxton.
They, too, are in foreclosure.
Financing, the buyers now acknowledge, was absurdly easy, with 80 percent available from one lender and the rest from another.
"They would buy two houses a day with four banks," says Michelle Krinsky, one of the Realtors who bought then lost a home in Grand Hampton. Young buyers would arrive with a simple letter from their parents saying they planned to contribute $50,000.
"They never checked the letters," Krinsky says.
Despite a steep decline in property values, much of Grand Hampton has retained its prosperous appearance. Mothers meet their children every afternoon at a school bus stop in front of Hampton Club, the epicenter of activity.
"You see people walking on the sidewalk as a family," says homeowner and business broker David Britton, 40, who got a foreclosure notice but said he is negotiating a mortgage modification. "It's grass roots America. It's really a tight-knit community."
Cracks, however, are starting to show.
LandMar, the developer, which also controls the homeowners association, is reorganizing in bankruptcy court. Lien notices filed in court show dozens of homeowners have fallen behind on assessments that run as high as $3,300 a year.
Some luxury houses sit on weed-strewn, overgrown lots. Models sit in close proximity to vacant homes.
"My neighbor's pool looks like a science experiment," says homeowner Walter Smith, an underwriter who also renegotiated his mortgage.
Angela Hooper, 36, has a different problem. She is paying $3,000 a month rent for her home, which she recently learned is in foreclosure. It's one of the homes purchased by Trisnadi, the California investor.
Hooper doesn't want to move — her children love the block and their school. But across the street, a house is abandoned. The one next door has been vacant for months. "I tell my kids, don't ever go in that yard, because of the snakes," she said.
Homeowners say all they can do is wait for values to rebound. "Probably every homeowner, or close to it, is under water," said Tim McIntosh, who moved to Texas and has his house on the market.
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In Carriage Pointe, investor-owned properties are everywhere. About two-thirds of the homeowners don't live there. About 20 percent live out of state.
Mary Wolf of Sarasota flipped a Hillsborough home for a $50,000 profit, then went in with a friend on a $256,600 house in Carriage Pointe.
"It's not like we were doing foolish things," Wolf says. "At the time, every financial planner you talked to said it was a good time to buy an investment property."
When Wolf bought the house, she said a Lennar official assured her it was limiting sales to investors to no more than 20 percent of the homes.
But a Times review of sales shows investors actually bought 60 percent of the homes. And though Wolf at first was able to rent the house for $1,100 a month, prices plummeted as investor homes multiplied.
Wolf's house went into foreclosure before she sold it at a 50 percent loss in October.
"I'm sad, but I'm so relieved to get it off my back,'' she says.
Other Carriage Pointe investors say it's hard to fetch rents of even $600.
"You can't cover taxes, homeowners' fees, you can't cover anything with rent now," says Ray Rojas, an investor who estimates his house is now worth about $70,000. He paid $189,500 for it three years ago.
Sheriff's Maj. Ronald Hartley, who oversees the area, says many empty houses have become drug dens and warehouses for stolen property. "If they're not in foreclosure, the homes are owned by people out of state," he says. "And in this economy, they are happy to get a renter, so they don't do a lot of background checks."
The county water department reports 1 in 10 homes have had their service cut since February. The community owes a combined $200,000 in back taxes. Crime in Carriage Pointe is higher than the county average.
This is the harvest the county is reaping from votes like the one in 2000, when commissioners eliminated development fees and made subdivisions like Carriage Pointe possible. A 2006 county report estimated that eliminating these fees would cost the county $92 million. Ditching the fees for Carriage Pointe alone has cost taxpayers nearly $3 million.
Some warned this would happen, including former Commissioner Pat Frank, who cast a dissenting vote in 2000.
"The bubble had to break at some point," says Frank, who is now clerk of courts. "It was very artificial. And I think the board was very important in inflating that bubble."
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So is anyone taking responsibility for what went wrong in Grand Hampton, Carriage Pointe and so many other Tampa Bay area communities?
Many blame greedy home buyers. Pioli, who now has sales contracts on his three Grand Hampton homes, blames banks. He says they would rather see a home change hands than work with a struggling homeowner.
Ronda Storms, who was a member of the County Commission majority that voted to eliminate development fees in Gibsonton, did not return repeated calls seeking comment. She's now a state senator.
The commissioners who voted with her, Norman and former Commissioners Chris Hart and Tom Scott, say they were just trying to do the right thing and don't feel responsible for what happened next.
"The free market was driving the construction of the homes,'' Norman says. "Who could have foreseen that people were making loans that weren't valid?"
Norman is running for the state Senate. Scott, now on the Tampa City Council, is running for mayor. Hart is considering another run for the County Commission.
Greco, Tampa's former mayor, says no one could have foreseen the depth of the recession and he is proud the city annexed nearly 5,000 acres in New Tampa.
"A lot of it has not been built on," he says. "When that building does take place, and it's just a matter of time, the city will derive the tax dollars."
Greco is now considering another run for mayor.
All over the state, elected officials who presided over the mistakes of the boom years have yet to pay a price at polls.
"When things go sour in the economy, it's the elected officials who usually bear the brunt of it," said Snaith, the UCF economist. "We're not seeing that in Florida. I don't know why. Voters perhaps don't dig that deeply into these issues. It's arduous and complex."
Corporate culture hasn't changed much, either. At Lennar, spokesman Marshall Ames issued this statement: "Unfortunately the foreclosure situation in Carriage Pointe is not unlike that in many communities built in many states during the boom in real estate. It is a function of the market."
Corporate reports show that Lennar made record revenues the year it sold most of the homes in Carriage Pointe, half of which were bought with mortgages issued by Lennar.
Since July, Lennar has pulled permits in Hillsborough to build 39 new homes. City officials estimate 22 homes are under construction in Grand Hampton.