[EdV]

Well, initially the devloper issues the bond in the name of the CDD. The money from the sold bonds is used to build the roads, electric, sewer, and water line infrastructure. Then as houses are built and sold, resposiblity for paying off each part of the bond is assumed by the homebuyer.

But when the bottom dropped out of the market and home sales ground to a halt, the developer/CDD couldn't make the required repayments so they stopped paying and went into default.

If some sort of restructuring is not worked out, the developer declares it bankrupt and the CDD Bond investers end up taking it on the chin.

Then as an offshoot from that, those homeowners that did buy in will often find their community pools empty and rec center closed down and amenities falling apart from disrepair. In desparation, they too will often put their home into forclosure.

Aren't you glad you asked?