You have to hope that the following story is an extreme one. If it isn't, then don't worry about the US housing market, that is already dead. Start worrying about the US banking system. If the case of Alberto and Rosa Ramirez is a common one, then we are looking at a US banking crisis, that could match the S$L shambles from the 1980s.

The story is simple enough; two poor families pool their resources and buy a house in a fancy area. Although the initial monthly payments are beyond their monthly income, the mortgage broker tells them that they can refinance at a lower rate in the near future. Of course, interest rates increase and refinancing becomes impossible. The house quickly goes into foreclosure, and Ramirez family is back where it started.

Some people might blame the Ramirez family for the mess that are now in. Certainly, they do bear some responsibility. However, the financial sector is supposed to be regulated. The world has suffered from enough banking crises to know that lax lending standards is the road to financial ruin.

The Ramirez family should have never received a mortgage. Furthermore, it is not the case of the government protecting the Ramirez family from themselves and their own stupidity. Rather, society needs to regulate unscrupulous lenders because when they go bust, credit contracts, and often sends the economy into recession.

"When Alberto and Rosa Ramirez began looking for a home, they never imagined that 18 months later they would personify a national real estate crisis. It's not that they bought a house with walls crawling with toxic mold or inherited an insane neighbor next door or, even, God forbid, that they didn't buy at all. They bought, and they love their slice of the American Dream. "It's all very nice and beautiful," Rosa tells me through a translator. "The neighborhood is very peaceful. The problem is not with the house at all. It's the price of the house."

Indeed, in a different era (when housing prices were lower), their story might have been one of those bootstrap tales about homeownership transforming immigrant lives. The husband and wife work as strawberry pickers in the fields around Watsonville, and each earns about $300 a week. They have three children. Not only did they dream the impossible dream, they managed to finance it.

It all began when they were talking to another family about escaping their subsidized apartments and getting a real house. The other couple -- Jesus Martinez and his wife, who also have three children -- work as mushroom farmers, earning about $500 a week each when there is work. The two couples decided to pool their resources and begin house-hunting. Given their total income, they estimated that they could afford payments of $3,000 a month. They spotted an ad in the local magazine La Ganga for Maria Avila of Rancho Grande Real Estate and called her.

"We wanted to live in Watsonville," says Rosa. "But [the real estate agent] said the houses there were older and more expensive." 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 that their real estate agent and broker reassured 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 -- $3000 -- 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 magic $3000 number would have been virtually impossible under any circumstances. An interest-only $720,000 loan at a miraculous 5 percent interest rate (15-year fixed) yields a $3,000 mortgage, but such low mortgage rates weren't available to anyone much less a laborer with a 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 stayed on the same loan, 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."

Maria Avila and Rancho Grande Real Estate declined to comment for this story. Earlier this month, New Century Mortgage, the nation's second largest sub prime mortgage lender, filed for bankruptcy. It's also facing a federal criminal probe. "