Many FReepers think those home equity loans were funding cruises and new sets of wheels for foolish (or reckless, or conniving) borrowers; I think the reality (which the government didn’t want exposed) was that much of it was used for basic necessities - masking the fall in our standard of living. As the dust settled, there was little for the banks to repossess; the food had been eaten, clothes worn, and heating fuel consumed.
Now people have no misconception about where we stand; industries built around discretionary income are dropping like flies. Here in NJ 1/3 of our casinos are gone; I expect most to follow shortly.
I think your thought is probably right to an extent. The underlying problem is that these prospective homeowners should never have qualified for a home loan in the first place, whether they used up the extra in needs or for frills.