Buyers/investors/speculators played their role in the bubble. $535K house on $65K income and equity from another house? Do the math.
Some of the biggest losers in the real estate slump are not purchasers of mansions they could not afford. They are buyers of second homes — or third ones, for that matter — who are sitting on a tax time bomb.
“We wanted to make it an investment,” Ms. Garcia said. “I should’ve sold it.” But the Garcias, who earn about $65,000 a year, fell behind on their payments after their tenant moved out and the interest rate on their mortgage rose, bringing their monthly payments on the rental home to nearly $2,700 a month, from less than $1,000. They view foreclosure as inevitable; they have not paid the mortgages on either house for months and now rent a home in Linden.
J. Scott Bovitz, a bankruptcy lawyer in Los Angeles, says the problem is widespread. “I’ve seen people not just buying properties to live in, they’re buying properties to become mini-Donald Trumps.”
(that's tiny-Trump™, J.Scott)