The As Is Situation - the house and our first mistake

We own our house. Rather, we co-own our house with a couple of different lenders.

Well here we are, a few years down the road, and the bottom has fallen out of the real estate market. Many of our friends in the neighborhood have already bailed out and we are one big event, a job change or major medical problem, away from following suit.

So our first mistake:
We ignored those old tried and true front-end and back-end housing debt-to-income and total debt-to-income ratios that responsible mortgage lenders have used for decades.