FROM the article you linked:
Given their total income, they estimated that they could afford payments of $3,000 a month.
One of the first homes they were shown was a "new" four-bedroom, two-bath house in Hollister for $720,000. When the Ramirez's heard the price, they worried that they couldn't afford it.
But the couple says they were assured them it was possible. "The monthly payment was supposed to be $4,800, but then after we bought it, it went up to $5,378," says Rosa, speaking of their zero-down mortgage with a one-month "teaser rate." "Our agent told us that once we refinanced, we could get the payments down to $3,000 or less." For a number of months Avila, who arranged for the loan with New Century Mortgage, paid the difference between what the buyers had said they could afford -- $3,000 -- and the actual loan payment. According to the buyers, this arrangement was supposed to carry them over until the group refinanced.
The money-saving refinance failed to materialize, and eventually, Avila stopped subsidizing their current mortgage. (According to my analysis of interest rates during the period, hitting the $3,000 number would have been virtually impossible under any circumstances. An interest-only $720,000 loan at a 5 percent interest rate [15-year fixed] yields a $3,000 mortgage, but such mortgage rates weren't available to anyone, much less a laborer with low income, no down payment and no other assets. Plus, that doesn't count another $750 a month in taxes and insurance.) The two families continued to make the payments, sometimes sacrificing basic necessities, other times borrowing more. "It was very difficult," Rosa says. "Sometimes we would eat less, and we took out personal loans from Bank of America."
