PRE-2005 the risk of over inflating collateral could be washed out via lien stripping of the under collateralized portion of a loan.
This lead to valuation fights with mortgage lenders.
After 2005 the bankrupcy law erased the undercollateralized risk. Essentially they held the primary residence via threat of homelessness.
Yes, but the piggybacking did something else.
Part of the idea of the down payment was to assure that the lender had something worthwhile under their loan. But the other part of it was to make it unlikely that the borrower would end up underwater at any point during the loan. HELOC’s eroded this additional source of stability.