I don't think this is correct. My impression is that most people who bought houses with problematic mortgages either didn't understand the terms, or got mortga

I don't think this is correct. My impression is that most people who bought houses with problematic mortgages either didn't understand the terms, or got mortgages with low introductory rates and thought they could exit before the rates started resetting because the housing market was so hot they'd always be able to resell at a huge gain, or use their lower LTV to refi into a better mortgage. And it's interesting that you bring up mortgages -- the clearest example of how your Libertarian ideology breaks down: what my new neighbor and a bank privately contract to do _will_ affect the value of my property over the next few years.