Miami Herald: Voices of the recession: Year after collapse, some still struggle

This article was published in the Miami Herald on September 15, 2009

A year after the economic dominoes began to topple, many believe the worst is over for Wall Street, though rising unemployment and foreclosures are likely to mean a long recovery for Main Street.

“Yes, it looks like the economy is bottoming out,” said Raymond James Chief Economist Scott Brown. But “it is still going to feel like a recession for most people.”

America’s financial crisis began one year ago when the investment bank Lehman Brothers — with its $600 billion in assets and century-old pedigree — filed for bankruptcy.

The collapse was the largest bankruptcy in U.S. history and came on the heels of the government seizure of mortgage giants Fannie Mae and Freddie Mac, and hours before the $85 billion bailout of insurance titan AIG.

How has the fallout affected people?

The nine profiled on Page 4A each have different vantage points on how the past year’s events have affected their lives.

While economists and politicians wrestle with the fallout of the Great Recession, these are the tales of its survivors.

SUSAN BARBINI

Like thousands of South Florida homeowners, Susan Barbini of Coral Springs faced losing her home to foreclosure this year. After a split with her husband, the mother of two says, it was impossible to carry the mortgage. The value of her home has fallen by almost $100,000 from its peak.

In a bid to help more than three million homeowners avoid foreclosure, the government launched the massive Making Home Affordable loan modification program in March to lower payments through interest-rate reductions. But it took Barbini — an intake coordinator at a Broward mental health center — 10 months, three rejections and some extreme perseverance to get GMAC to approve her.

At one point, after the bank suggested she rent a room to boost her income, Barbini built a wall through her den to create a spare bedroom. She got a roommate but was still rejected for the loan.

“It took everything in my power not to give up and quit,” Barbini says.

She persevered, and three weeks ago, Barbini got a letter from the bank congratulating her. Her interest rate is now 2 percent. Her monthly payments have dropped from $2,000 to $1,300.

“ And now I am going to be able to stay in the house with my kids,” she says.

— MONICA HATCHER

JOSEPH VAN ERON

Joseph Van Eron has been juggling bills this year at the Liberty Suites vacation complex, waiting for the gay travel market to bounce back.

The 60-year-old co-owner of two apartment buildings in Dania Beach can’t remember a worse 12-month stretch.

Revenues are down 25 to 30 percent for the 18 apartments Van Eron and partner Jack Zimmerman rent out. Rainbow flags fly from wooden fences in front of both modest buildings, and Van Eron says the clientele is mostly gay men.

Sometimes he and Zimmerman must wait for a guest to check in before they can pay their bills. “Thank God we’ve got that one-week booking,” Van Eron says, recalling his thoughts during a recent lean time when there was no money for the electric bill. “That will help with FPL.”

While a recent advance-booking discount helped business, some regulars have written to say they hoped to see Van Eron and Zimmerman in 2011, since 2010 isn’t possible.

But even a year after the crash, this summer brought a disturbing lack of bookings for the winter.

Sometimes business is so slow that Van Eron literally doesn’t believe it. “There are times when we’ve actually gone to another phone and dialed our main number to make sure the phone was still working,” he says.

— DOUGLAS HANKS

KEVIN McLEOD

Crashing property values have made first-time home buyers out of many South Floridians over the past year. Kevin McLeod, 31, who works as a power plant operator for Miami-Dade County Water and Sewer Department in Homestead, is one of them.

During the boom, McLeod watched property values practically leave Earth’s orbit. But earlier this year, motivated by deteriorating property values and a growing stock of foreclosures, he started the hunt for a place of his own.

The condition of homes he saw in once-white-hot neighborhoods astonished him. “Some of the homes are horror stories,” he says. “People have taken sledgehammers to granite countertops; they’re stealing air conditioners; they break the toilets. I have seen where a guy . . . took a pickax to the floor.”

An agent helped guide McLeod to the home of his dreams: a three-bedroom, two-bath with an oversized pool on a 3/4-acre lot. It needs only about $20,000 in work.

McLeod closed on the $115,000 home last Friday. “I never in my life thought I would be able to own a home like this on my own income,” McLeod says.

He qualified for the first-time home buyer tax credit. “I’m getting $8,000 back from the government that’s going to help me fix my home or whatever I need to do. What a deal. These houses were going for $300,000-plus at the height of the boom.”

— MONICA HATCHER

JIM MOON

For Jim Moon, business is pretty good right now.

While some lawyers are facing layoffs, Moon is swamped with work.

“I was very fortunate to have gotten into bankruptcy law,” says Moon, an associate with Meland Russin Budwick in downtown Miami. “I know that for friends of mine who did things like real estate, it’s horrible out there.”

The bankruptcy business is booming. For the 12 months that ended June 30, more than 25,000 bankruptcies were filed in South Florida. That’s a 70 percent increase from the previous year.

Moon says his practice isn’t just busier now; it’s also different. More of his clients are forced to liquidate their businesses rather than reorganize because they can’t stay profitable in this economy.

While businesses are his paying customers, he’s also doing pro bono work to help those who can’t afford an attorney. These cases can be highly emotional, he says.

“They’re losing their only means of getting back and forth to work, their marriages are failing because of everything that’s going on, and they’re really reaching out for help,” says Moon, 40, who is president-elect of South Florida’s Bankruptcy Bar Association.

The University of Miami Law School, the Put Something Back Pro Bono Project and the Cuban-American Bar Association have all organized programs to help.

The problem, Moon says, is “there’s only so many of us.”

— SCOTT ANDRON

HYMAN ROBINSON

For Hyman Robinson, the past year has been hard on the wallet.

The retired chief executive of a New York scrap metal company, Hyman was relying on investments to support himself and Florence, his wife of 68 years.

“The value of my money — it just evaporated,” says Robinson, who turns 90 in December.

Like many families, the Robinsons had to scale back their lifestyle. No casual shopping, for instance.

“If we see clothes or something, we used to just buy it,” Robinson says. “Now we make do with what we have. I have to watch every penny and dime.”

The couple own their condominium, at the Wynmoor Village retirement community in Coconut Creek, and Robinson is looking to cash in on that equity through a reverse mortgage — in which a bank loans money to the homeowner in the form of monthly payments.

In the meantime, don’t ask Robinson how his investments are doing. He says he has stopped looking.

“I’m sick enough,” he says. “I don’t want to get sicker.”

— SCOTT ANDRON

MAGGIE LUJARDO

Condominium association presidents have faced grueling challenges over the past year keeping cash-strapped complexes afloat as condo owners, facing foreclosure, stop paying their maintenance fees.

At the Village at Dadeland Condo in Kendall, association president Maggie Lujardo, 45, has watched at least half the 410 units in the condo conversion project fall into foreclosure.

The budget shortfalls have put an enormous strain on the complex. Over the past year, the pools have been closed, and maintenance and garbage collection have been cut back. The association successfully sued the developer for shirking maintenance fees on 15 units.

“I answer all the phone calls that come in from unit owners or vendors looking for payment, and there are a lot of complaints,” says Lujardo, an attorney who owns an investment property in the complex.

Lujardo is reluctant to raise maintenance fees because it puts more financial pressure on owners who have already seen values fall by 50 percent.

“People are losing hope,” Lujardo says. She, however, has faith that property values will stabilize, boosting sales and restoring the Village at Dadeland to health.

And she’s worried about serving for another year: “I’m scared not to . . . there is really no one to take the job.”

— MONICA HATCHER

ALEX GUERRA

A year ago Alex Guerra, 37, drove a Porsche and had his own place and enough faith in his computer skills to believe he could invest time and money in completing a master’s degree.

Today, Guerra has the degree — but lives with his mother, is at risk of losing his leased Mini Cooper and has seen his savings and self-esteem decimated by a year and a half of unemployment.

“You drive yourself nuts wondering what is it about you that is so wrong,” he said of the unanswered calls and e-mails to potential employers. “ `What are you not doing right? Am I really that lousy?’ Those are the things that go through your head.”

Guerra worked as an IT consultant before becoming an independent contractor for Miami-Dade County. He was there for three years and in talks to go full-time when negotiations broke off. He decided a master’s degree in information science would lead to more money and enhance his job search.

He graduated in September 2008, just as the economy collapsed.

When he’s not looking for work, Guerra is volunteering and nurturing a side business as an event planner with a friend. Their first production, a racy Sept. 26 costume ball at the Skyline Lounge in South Beach, could boost his morale.

“I don’t think my ego could take another loss,” Guerra said. “We can’t take another failure in the trying-to-make-it-in-South Florida game.”

— JIM WYSS

RAMIRO ORTIZ

On May 21, federal regulators swept into the Coral Gables headquarters of BankUnited and seized the ailing institution.

Although the next morning was business as usual under new ownership, the move was dramatic: Florida’s largest thrift had become a victim of the economic downturn, cut down for betting on home loans that went sour.

Ramiro Ortiz, 59, was the bank’s CEO and was kept on as senior executive vice president of the new, recapitalizedBankUnited.

Sitting in the institution’s penthouse boardroom, Ortiz says nothing but hurricane analogies are appropriate to describe the past year. “This economic crash was, indeed, the perfect economic storm,” he says.

Despite the recent Wall Street rally and signs that the storm may be passing, Ortiz fears the state is still a long way from safe harbor.

The key to the turnaround is the consumer, he says. Until people are confident enough to open their wallets, no amount of government spending will kick-start the economy. BankUnited recently launched an expedited loan program aimed at small-business owners starved for cash. But demand for loans has been weak.

“We are still in the storm,” he says. “But at the end of the day what we have learned in Florida is that storms come through and they leave; and we’ll eventually get through it.”

–JIM WYSS

RAMONA ALVAREZ

When Ramona Alvarez, 52, opened her beauty salon in Hialeah two years ago she greeted new clients with a glass of wine or a virgin margarita. Her six employees always had their chairs full, and Alvarez’s bills were getting paid.

The shop, called Nely’s Beauty Salon, was the culmination of a dream. Alvarez had arrived in Miami in 1980 from Cuba and worked hard to buy a house, some property and her own business.

Alvarez says she paid $160,000 for the Hialeah shop, tucked inside a mall on 3110 W. 76th St, and invested another $60,000 in upgrading the salon.

But things started to change last June. Clients began missing appointments, dyeing their hair at home and skipping the blow dry. Her bank pulled two lines of credit.

As the business stumbled, Alvarez kept it running on credit cards, thinking next week would be better. It wasn’t.

Now Alavarez finds herself deeply in debt. She says she is losing her home and three pieces of land that she was counting on for her retirement.

Months behind on her rent, Alvarez says she’ll go out of business the day she gets shut down. “We’re just waiting for the sheriff to come by here and put [the eviction notice] on the door,” she says.

Alvarez says she smiles and laughs when she’s nervous. Asked about what comes next, Alvarez smiles: “This is the first time in my life that I really don’t know.”

— JIM WYSS