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Plain and simple, they were responsible for giving high risk home loans out. The people who got the loans were risky and it was highly unlikely that they could make the balloon payments or the loan rates after they were raised.
Also the banks did not care if they defaulted cause they would end up with property way more valuable then the loan, well after the fall out the homes ended up being worth less then what was owed and that just fucked every thing up.
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