The Unwinding: An Inner History of the New America (31 page)

In the spring of 2006, Van Sickler began to hear about a man named Kenny Rushing.
He was a black real-estate salesman, which was unusual in Tampa. His name and face
appeared on billboards and TV ads as the caped superhero Captain Save-a-House, a play
on the rap song “Captain Save-a-Hoe.” He held jam-packed tent shows, where he showed
up in a white Bentley and a Kangol cap, trailed by a convoy of Hummers festooned with
his picture. He preached that the city’s black poor could get a piece of the housing
action just like everyone else, by buying up distressed properties and selling them
for huge profits. “It’s time to do for self,” Rushing told an audience in Ybor City.
“Black folks dominate what? Sports and entertainment. I want them to say that blacks
dominate real estate, which has produced more millionaires than anything else I know.”

It was all about empowerment, civil rights, and getting rich. Rushing had been a drug
dealer as a teenager in Des Moines and done four years in a Florida prison. He made
his story part of the motivational pitch, telling young dealers that they, too, should
turn their smarts to the legitimate pursuit of flipping, enriching themselves while
benefiting black homeowners who needed financial relief. “It was Carnegie crossed
with Jay-Z,” Van Sickler said. “The thing about the economy in Florida back during
the boom years—it was hardly booming. It was only booming in one sector, and that
was real estate. If you weren’t on the inside, you were struggling just like everybody
else.”

Van Sickler began looking into Kenny Rushing. In his self-presentation he was just
a low-level drug dealer, but in fact he had been a major crack distributor for the
Crips. His stories of Golden Gloves titles were fabrications. And Captain Save-a-House
turned out to be exactly the kind of predator that he denounced at his sold-out seminars.
He had persuaded a seventy-three-year-old black grandmother in an aging, mixed neighborhood
called Tampa Heights to let him take her dilapidated house off her hands for $20,000.
The woman owed almost all of it on a loan from the city and ended up with just $1,729.
Three weeks later, Rushing sold the house to an investment trust called Land Assemble
for $70,000.

Van Sickler asked Rushing about the deal.

“If I had known the house was worth seventy thousand dollars I would have paid her
a lot more,” Rushing said, “sixty thousand easy. Don’t slant this, I’m not taking
advantage of a woman.”

Van Sickler, in prosecutorial mode, asked if Captain Save-a-House would give her some
of his profit.

“I’m not about to say, ‘Here you go, here’s all I made on the property.’”

In four years, Rushing and his partners had cleared well over a million dollars. Fifteen
of the deals were in Tampa Heights, which, not coincidentally, was the planned site
for a huge five-hundred-million-dollar redevelopment project, called Heights of Tampa,
with nineteen hundred upscale condos and townhouses. Rushing was acting as the front
man for two of Tampa’s most powerful developers. He minimized the relationship, and
the developers denied knowing him.

Van Sickler was intrigued by the connection between a former crack dealer and the
city’s elite, and he published his story in May. It introduced him to the vast underside
of the hottest real estate market in the country. A broker he talked to while reporting
the story passed along a tip: “If you think Kenny is something, you should check out
Sonny Kim.”

By the time Van Sickler caught up with Sonny Kim, the music had stopped.

*   *   *

Some people in the Florida real estate business could identify the precise moment
when it happened. For Marc Joseph, a broker in Fort Myers and Cape Coral—the eye of
the madness—there was a week in December 2005, with the average price per unit at
a peak of $322,000, when the phone didn’t ring as much as usual. It felt like a car
slowing to a halt as all the air went out of the tires. Others timed the moment a
few months before or after that and compared it to the lights being switched off.
At some point in late 2005 or early 2006, with the housing market at its dizzying
mid-decade height, speculators suddenly lost confidence, the faith that kept Florida
aloft gave way, and the economy plummeted like a Looney Tunes character who, suspended
in midair, looks down. Prices did what borrowers, lenders, flippers, Wall Street traders
betting long, credit default swap desks, Fannie Mae, Asian bankers looking for 8 percent,
antic boosters on CNBC, and Alan Greenspan somehow never imagined possible: they started
to decline.

It took a year or two for the effects to be seen across the landscape of boomburgs,
brokers’ offices, construction sites, and retail malls. In early 2007, an official
of Allied Van Lines reported to the Florida Chamber of Commerce in Tallahassee that
the company was moving more people out of the state than in. Between 2007 and 2008,
the number of electrical hookups in Florida decreased for the first time in the forty
years that records had been kept. And for the first time ever, the state’s net flow
of immigration, the engine of the growth machine, dwindled to zero.

Lumberyards sold off equipment. Car dealerships laid off salesmen. Developers filed
for bankruptcy, and their wives filed for divorce. By early 2008, the concrete company
where Ron Formosa worked in Cape Coral started getting rid of guys. First Ron saw
his hours cut in half, then he lost his job. At the same time, adjustable interest
rates went up and balloon payments on subprime loans came due, which meant that borrowers
like the Formosas, who were already watching their incomes and property values melt
away, had an even harder time keeping up on their mortgages. Ron and Jennifer filed
for bankruptcy, but they couldn’t afford the fourteen-hundred-dollar fee, even after
Ron found a job working for a locksmith, making nine dollars an hour changing the
locks on foreclosed houses. The Formosas went a full year without making a mortgage
payment before the bank put an ugly yellow auction sticker on their door. They found
a nearby rental and vacated the house. Jennifer vowed to save her money next time
instead of spending it. “I don’t think I’ll ever want to buy a house again,” she said.
This was how the foreclosure epidemic began.

On State Road 54 in Pasco County, the developer stopped work on Country Walk midproject,
leaving behind streets whose pavement ended in wiregrass after a few feet, streets
with signs and lights but no houses, streets with houses but no occupants. The promised
tennis pavilion and beach volleyball court hadn’t materialized. In a front yard, there
was a
FOR SALE
sign next to a collapsed inflatable Santa Claus. Three yellowing copies of
The Tampa Tribune
lay on the front pavers at 30750 Pumpkin Ridge Drive, with trash in the kitchen and
the fridge door open, and a
FOR SALE BY OWNER
sign in the yard. Half or two-thirds of the houses were vacant, but the residents
who hung on in Country Walk parked their cars in the empty driveways and kept the
neighboring lawns of San Augustine grass mowed to avoid an appearance of decline.
On the more forsaken blocks the change was obvious—six inches of grass, weeds in the
driveway, copper wiring ripped from the air-conditioner boxes, a rash of green mold
spreading across a beige stucco wall, a
VACANT
or
ABANDONED
notice tacked to a front door. But the collapse of the Ponzi scheme was unspectacular,
with no demolished factories or abandoned farms. The ghost subdivisions were pretty,
in a way. Under the brilliant aquamarine sky the houses looked like perfect cardboard
cutouts, the surfaces smooth and regular, the blinds drawn, the landscape almost untainted
by human life.

The prices that had rocketed skyward dropped just as fast to earth. Up State Road
54 from Country Walk, Bunny’s house in Twin Lakes, which had gone from $114,000 to
$280,000 in six years, fell to $160,000 in two years. Some of the houses on Bunny’s
street had been owned by flippers, and some had been owned by people who could no
longer afford to live in them, but in both cases nobody was there, and on a weekend
afternoon Bunny from Utopia Parkway was watering her lawn, in hip-hugging Capri jeans,
a sleeveless top, and silvery-green eye shadow, without another soul in sight.

Usha Patel’s Comfort Inn earned a million dollars in her first year, eight hundred
thousand her second. She found Americans to be hopeless employees. They lived day
to day, collecting their paycheck on Friday, clubbing and partying even if they had
kids, skipping work Monday, showing up late Tuesday, refusing some tasks because their
pay was too low, always full of complaints and excuses—“My son took my keys.” They
might give her a week of hard work and then demand a vacation. Or a cigarette break
every ten minutes, even if they didn’t smoke. When Usha talked about American workers,
her nose scrunched up and her mouth turned down and her eyes narrowed as if the subject
was physically unpleasant. They were spoiled, as she had once been spoiled, and it
was by all the foreigners doing cheap labor. The only good people she ever hired were
immigrants like her, who were trustworthy and willing to work hard for low pay—a night
manager from the Islands, a guy from India, the Spanish housekeepers.

But her optimism about the country was undimmed. It was the land of opportunity for
everyone. “I love America,” she said. “If any foreigner can come and get success,
the people living here don’t want to work.” She liked America’s rules and laws, the
lack of corruption, the fact that anyone could get justice. Her son had become a young
businessman—he owned his own computer shop in a Tampa strip mall and drove a BMW and
lived on the twenty-sixth floor of a condo tower downtown. Compared to India, America
was a dream.

In her third year, 2007, Usha’s earnings dropped to half a million dollars, with occupancy
at just 25 percent—you needed 50 percent to survive. Two things conspired against
her motel. The first was the housing crash, which was beginning to bring down the
wider economy (she blamed it on strict border enforcement, which kept out all the
good foreign workers). The second was construction work on a new shopping mall along
the access road between her Comfort Inn and I-75, which began around the same time
as the downturn. The work closed her exit at night and took away her highway sign,
which killed her business (the mall was never finished). She started having trouble
making her twenty-five-thousand-a-month payments. Her son helped out, but before long
she was falling behind.

Mike Ross got caught by the collapse in the middle of a family crisis. He asked a
court to grant him custody of his grandchildren because his daughter and her boyfriend
in St. Petersburg were abusing them—the boyfriend threw the one with cerebral palsy
into a swimming pool and laughed, Mike said. By the time Mike and his wife, who was
on disability from an auto accident, got custody, they were two years behind on the
renovation of their old farmhouse in Georgia. Before they could finish, the market
turned, and their $180,000 property ended up selling for $110,000. Mike’s former clients
in the yacht business advised them to move to Northern California, far away from the
abusers, and flip houses there, but when they arrived in Vacaville with the grandkids,
the economy was tanking and there was no work, not even in gas stations or 7-Elevens.
Plus the financing rules had all changed, so it was impossible to get a loan and start
flipping. The move cost them fifty thousand dollars, half their savings. After six
months in California they moved back east, to a nice little town outside Raleigh,
sort of like Vacaville with trees, but North Carolina was California all over again,
no jobs in construction, auto body work, or anything else Mike tried. They were running
out of money, and Mike began to fear they’d end up homeless. There was no choice but
to move with the grandkids back to St. Petersburg, where the daughter and her boyfriend
still lived.

Mike tried to get work with his old customers in the yacht business, but they were
all well cared for by the repairmen he’d turned them over to. He hung around the Pasadena
Yacht and Country Club for a while but didn’t get a single call. That life was over.
He borrowed money from a former client to put his family into a rental apartment in
a ghettoish neighborhood, where the kids in the parking lot picked on the grandson
with cerebral palsy. They were living on food stamps, his wife’s disability, the grandson’s
SSI, and charity. Mike was deteriorating psychologically, his mind racing three hundred
miles an hour—he was afraid of homelessness, suicide, the loony bin, running into
the boyfriend, who didn’t know they were back in St. Petersburg—afraid all the time,
making up stories in his mind about what could happen to him and then finding that
the things
did
happen. And he had once been so calm, so steady, varnishing yachts in the marina
under a blue sky. His torso ballooned, and though he could still laugh at himself,
his eyes stared out through rimless glasses in medicated sadness. He was on painkillers
for back pain and Xanax for anxiety, and once, tired of it all, wanting to put his
load down and sleep, he took thirty Xanax and four Vicodin and fell into a two-day
coma.

“The economy triggered it all,” he said. “It just ripped me apart, it took away my
will to live. That’s the way I see it.”

They locked Mike up in the loony bin for three days. When he got out he threw himself
on the mercy of a Tampa crisis center, where he was given counseling and help with
the electric bill. He had always thought of himself as middle-class, and it amazed
him to come so close to living in a homeless shelter. But the mental ward and the
crisis center sort of snapped him out of it. He read a book called
Finding Life Beyond Trauma
and started taking deep breaths, got in touch with his spirituality, learned to turn
away from his worst thoughts. Since the medical field was recessionproof, he signed
up for a training course, paid for by the government, as a home health aide. He found
a job making $10.50 an hour, without benefits, helping a ninety-one-year-old World
War II vet with dementia go to the bathroom. It was no harder than repairing millionaires’
yachts. Mike was glad to be of use.