You are correct and that is where the problem lies. Congressional laws and legislation forced the lending entities to lower their loan standards until those that knew they could not afford a home said, "what the hell, what do we have to lose", let's give it a try. It will most likely be the only chance we will ever have. This is America...... Surly someone will take care of us if we make a mistake. They have in the past..... And, what were the lending institutions supposed to do???? Break the law and not lend the money????
And there in lies the problem that was started 30 years ago and has finally erupted in the biggest economic disaster in US history. Sad but true.