"They thought it was fixed, but it wasn't."
Foreclosure is the market's way of removing from the ranks of homeowners people who shouldn't own homes.
Yup...pretty much. Sure, a few unlucky people who honestly had unforseeable problems may lose theirs too but at no more of a rate than usual.
In some cases, that's true, in others, it isn't. The job market has been extremely volatile over the past 7 years or so and people who once made very good money and could afford expensive homes suddenly found themselves out of work and facing bankruptcy because their corporate officers didn't pay attention to what was actually going on in the business. The next thing anyone knows, the business is in bankruptcy, accounts are gone, revenue is down 70% and there are massive layoffs.
No one is bullet proof and this can happen to any of us. This is why networking is so important. The more friends you have in high places, the better your chances of coming out smelling like a rose.
I'd rather a scofflaw who refuses to pay or can't pay due to foolish delinquency live next door, than a compulsive drunk driver, molestor, illegal alien, or meth cooker.