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I went through the process of buying a house during the height of the boom, and I think it is unfair to label many of the victims (the people losing their homes) as greedy or stupid. When I started looking (with no chance of putting together a down payment for 5 years or so) for houses, I stepped into a strange and surreal world of extremely friendly people who gave me, even then, a sense of doom. The day I walked into a real estate agent's office, she told me that I could get a loan with 0% down, and then she took me to her friend, a lender. He looked at my assets (I owned nothing except a 25 year old car--I had just left grad school) and said that I could buy a house in a range that left me breathless. I mentioned that I was not a US citizen nor a resident alien (I was in the US on a legal working permit), and they told me that in the US anyone can buy a house. I mentioned that I was single and that I had no guarantees that the job that brought me to the area would last, and they assured me that I could sell in a year if needed. In tandem with the lender, the agent took me to houses that were palatial (in my opinion)--they were gorgeous homes with numbers of bedrooms that a single woman with two cats would have no need for. When I mentioned that I did not feel comfortable buying a home that would lock in 60-70% of my monthly income, they offered ARMs and 40, even 50, year mortgages. The way these offers and alternatives was offered to me, it was almost impossible to NOT dream of owning one of the palatial homes. These lenders (and agent and the entire system) did not give me facts, they offered expertise (they were experts and I didn't even know what equity really meant), knowledge, and, worst of all, the possibility of security. To a single woman, the security of making a sure bet investment (this is the day and age of Enron) was intoxicating.
However, perversely, after living in a 420 sq. feet studio for several years during my grad years and after experiencing poverty (as a foreign student I couldn't get loans, which made me very wary of these easy housing mortgages), I felt that something wasn't right. I settled on a modest house (40% of my income)--to the absolute horror of the agent and the lender (horror expressed to me many times and once the lender even got annoyed with me and told me that I could get more equity with a more expensive home, which didn't make sense, as I pointed out to him because i would be spending more in interest--with a fixed interest rate.
My point is that unless you bought a home during the housing boom and unless you are one of "those people" these bastards targeted (single, young, foreign, poor, uneducated about finances--anyone who has been marginalized), you cannot throw stones at us. I had my experiences as a grad student to rely on as well as a sense of insecurity after 9/11 when so many foreigners were targeted. If I had not been told by the business offices where I did my studies that foreign students are not eligible for loans, period, and if I had not felt that my time in the US may be impermanent, I very well would have gone for the palatial home, NOT because I am stupid, but because the system these used car salesmen had created.
These lenders need to be targeted. And someone needs to step in HELP the people who are in danger of foreclosure. I am in a good place, and even with house prices plummeting, I can still make a bit of a profit if I decide to/can sell. However, around me, in my subdivision, there are houses that are foreclosing and my heart goes out to them. This is not about money and the market. This is about human beings.
