> People do not lose their shirts when leveraged real estate purchases go wrong, because it's the bank holding the bag That is not true, both parties suffer. I

> People do not lose their shirts when leveraged real estate purchases go wrong, because it's the bank holding the bag That is not true, both parties suffer. Imagine paying 10 years worth of mortgage in a place turned bad (NY in 80s, Detroit recently, Greece even more recently) and finding out that you're still in very negative equity. All your payments have been for nothing, and the most reasonable course of action is to go bankrupt and have the house foreclosed. Also, US mortgages are on central government balance sheet, not bank balance sheet, so it's the taxpayer that suffers.