Jesus and Lilia Garcia

Jesus and Lilia Garcia, tiny-Trump™
Buyers/investors/speculators played their role in the bubble. $535K house on $65K income and equity from another house? Do the math.

2008-05-30: Lose Homes, Pay More Tax
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.

Two years ago, Lilia Garcia and her husband, Jesus, bought their dream house in Linden, Calif., for $535,000 and financed it in part by taking out a bigger loan backed by their previous house in nearby Stockton. They decided to hang onto the Stockton house and rent it out, believing that it would more than pay for itself and could be sold years in the future to help pay for college for their two children.

“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)