A generation or so ago home owners paid on mortgages with fixed rate interest charges. Then, the lenders got 'creative' with variable rate mortgages. They induced the home owners to replace the old mortgages with variable rate instruments initially at lower rates.
These second mortgages reflected the ever-increasing value [supposedly] of real estate. Typically, the borrowers used these funds to increase consumption. They assumed that the surging housing market would forgive any amount of financial mismanagement.
Under swimilar delusions, bankers and real estate agents became increasingly lax concerning the ability of their customers to maintain their home payments.
The market in a precarious position, it did not take much to set off a precipitous decline.
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