In a nutshell this is who we can blame: EVERYONE!
It's Joe Q. Public's fault thinking he can afford an adjustable rate mortgage because he only thinks about now, not 10 years down the road when his rate jumps 10%. He puts NOTHING down because he has saved NOTHING. Maybe at the very least he can scrounge up 5%. For example, an annually adjusted ARM for $150,000 may start at 5.75%, but a 6% cap could allow it to go to 11.75% within four years. This would raise the payment from $875 to $1,514, an increase of $639. Joe Q is prepared for the $875, but not really for the $1514. He just "assumes" he'll have it. We all know what happens when we assume something. He puts nothing or almost nothing down and so has shown ZERO, ZILCH, NADA financial restraint and responsibility.
It's the Bank's fault for allowing these loans to happen. They want you to be late so they can collect penalty. They just don't want you to default. They don't want you if you have great credit or ass poor credit. Just good enough not to default and bad enough to charge you a higher rate and collect a few penalties from time to time.
What in the hell ever happened to 20% down and a the 30yr fixed rate mortgage? Very simple.
It's the government's fault, BOTH SIDES, for allowing this to happen. The Democrats, especially Carter, were all for giving and giving and giving. Somewhere along the way giving poor and lower middle class people access to home ownership became a cause for the Democrats. Republicans, not wanting to lose votes, decided to hop on that bus as well. Even W. made some comment to that effect some time ago. Now, what happens with you have both sides going in the same direction? No oversight, no checks, no balances, no regulation. This is why we have a two party system. Both sides eventually fight it out and have to come to some sort of middle ground. In these two sides you really have 4 sides: Extreme Right, Extreme Left, Middle Right, Middle Left. No Democrat will ever win in the midwest/south unless he's a little toward the middle. No Republican will win on the coasts unless he's a little toward the middle. These are of course generalizations, but you get my point.
Instead of pointing fingers we need to fix this by inserting a little more personal responsibility on the consumer, business, and government. Roll the clocks back to 1950 and start requiring a much larger down payment. It used to be banks wouldn't even give you a sniff unless you have 20% down. Why? This shows financial responsibility. Regulate banks better. Right now everyone has their hand in the mortgage cookie jar and Aunt May isn't around to slap their hands. That's the crux of the problem. Fix the current syptom, then correct the cause with more regulation and rules.
Alan