I think the average consumer who got over-extended believed the people who were telling them they could afford more.

"Average"? So on 'average' we're so dumb we can't count our money, don't know how much we make a year, and aren't able to do the basic math that would tell us this is a bad idea?

There's an easier answer. The 'average' person either had a set back and wasn't willing to face the music (i.e. lost their job and was living above their means)... OR.... (more likely) they knew exactly what was going on but didn't think it was a bad idea.

I took a five year fixed (teaser) loan with a variable interest rate after that because I knew darn well that I'd be moving in 5 years.

IMHO most of these people took the loans because they *also* weren't planning on staying in the house. They were planning for the market to go up and then they'd sell it or refinance.

But their "sure thing" turned out to be not so sure. IMHO they knew the risks, and if that risk was bankruptcy then that's what should happen. But if they got the loan through fraud then they could, and IMHO should, face other legal action as well.