The public, through the "Truth in Lending Laws", had to presented the total costs and the understanding of what adjustable rates would mean. But it seems a P.T. Barnum was right "A sucker is born every minute" and despite seeing the truth in front of their eyes (and the majority being government educated) they signed on the dotted line and thus created a Legal Binding Contract.
Now where the president and the congress think they can change a Legally Binding Contract is beyond me and I pray that the U.S. Supreme Court would throw out any legislation to do so, because it opens a legal Pandora's Box in the fact that the government could undo any legally binding contract from then on.
The solution, which has already started to be implemented, is to reduce interest rates and induce those with such mortgages to refinance onto a fixed rate. (A market instead of a Marxist fix).
It’s bullshit to think that government policies caused this.
The banks are able to effectively dictate the cost of real estate based on the amount that they are willing to loan.
And as long as they were able to loan more and more, and the apparent value kept rising, it was a win-win proposition for all involved.
So, now that the values are vastly overstated, and the incomes are realized to be way too insufficient, and the risks have been pawned off to hedge funds, equities purchased by the Europeans, and small company retirement benefits packages, you think it’s the governments fault?
The minority issue is the elephant in the living room. The government couldn’t stand to see minorities turned down for mortgages at a much higher rate than other groups so they pushed to even out those rejection rates. A lot of people got in over their heads. Now the government will push to even out the foreclosure rates. Equal outcome is more important than equal opportunity.