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Put yourself into the home owner's shoes.
If you saw houses appreciating at 10-20% each year, and somebody offered you 100% financing with a low teaser rate, what would you do? Is it hard to imagine some people taking that deal? Unlimited upside and no downside from the borrower's perspective.
And the banks thought they could shed the risk to investors. In part, they did, and investors were fools. But now the fed is saying "hey, banks -- let's keep the teaser rates you offered to those folks who shouldn't have been given a loan in the first place!"
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