> people who took on a mortgage they couldn't keep paying (after the ARM bubble Citation needed - most of the indexes used for anchoring ARM rates either dropp

> people who took on a mortgage they couldn't keep paying (after the ARM bubble Citation needed - most of the indexes used for anchoring ARM rates either dropped or stayed steady leading up to and through the sub-prime mortgage crisis. An ARM fixed to LIBOR for example would have dropped in rate when it adjusted. Problems did occur with non-standard loan types - Interest only, balloon payment mortgages, etc. however the biggest problems occurred because many people had borrowed too much $$ to have any equity in their homes if the values dropped at all. These borrowers found themselves 'upside-down' on their mortgages, unable to sell their homes to move as they owed more than they'd get from the sale. Some of those owners walked away from their homes, some ran in to balloon payments or the end of their interest-only terms and some rode it out. The ones that didn't ride it out got foreclosed on and we're still recovering from the mess.