Even if someone is in the "prime" category, it doesn't mean that they didn't overspend for their home. Those are the people that are struggling and/or in trouble.

Wages in this area simply haven't kept up with this decade's increase in housing prices.

As an addendum to my last comment, I wanted to refer to a passage in Jamie's article:

"The narrative we constantly hear is, 'We met with a mortgage company or broker; we asked, "Can we really afford this?" and the answer was, "Absolutely."'"

I'm slapping my forehead here. WHY did these people (the buyers) not hold themselves accountable and determine what they truly could afford? OF COURSE a salesman (the mortgage broker) will tell you that you can afford it. This is how he gets paid.

These borrowers are grown up people that don't want to take accountability for their decisions.

Why wouldn't people take such accountability when making the biggest purchase they will ever make?

Hi, Ron -- the "why did you do it" question is a key one. Certainly there were people who knew they were overstretching and overstretched anyway. But I think several things conspired to lull others into a false sense of "I'm not stretching" security:

1. It wasn't that long ago that lenders wouldn't let people borrow more than they could reasonably be expected to pay back, so it's not hard to see how some buyers and refinancers thought a lender OK meant something.

2. The explosion in the availability of complex mortgage products for average folks meant that people might have thought they could afford the payments because they didn't fully understand the loan (and didn't realize they didn't fully understand).

3. People were sold on the idea that the new way of borrowing is to get a "starter" loan and refinance in two years with a better rate, a fixed rate, etc. That might have worked (or at least not ended in disaster) if home prices kept going up.