[DuncanWaring]

...millions of new buyers were moving into homes with no down payment, and with mortgage payments that were often equal to, or less than, the rent they had been paying.

That was only because the mortgages were interest-only Option ARMS, with no principal payments for the first two or three years. Once the interest-only period ran out and the borrower had to start paying-down the actual loan, the monthly payment doubled or tripled.

[zeestephen]

Yes, I agree.

The premise of those loans was based on the theory that home prices would continue to rise rapidly.

Thus, after 2 years, the “value” of your home might be 15% or 20% above the price you originally “paid” for it.

That increase in value would be viewed as “equity” by your lender.

Thus, in theory, you could qualify for a “normal” mortgage with “normal” interest rates and “normal” monthly payments.

When home prices began to go down - BOOM - the entire financial premise for millions of loans exploded, and people just walked away, from their homes and their mortgages.