A study of 4,000 foreclosures from 2006-2008 in Southern California found that:
[B]orrowers who defaulted on their mortgages didn’t purchase their homes at the top of the market. Instead, the average acquisition was made in 2002 and many homes lost to foreclosure were bought in the 1990s. More than half of all borrowers who lost their homes had already refinanced at least once, and four out of five had a second mortgage.
The lenders who made these loans have paid dearly (and often appropriately) for the lax underwriting involved. In part, they believed that they were making loans, when they were really investing in real estate in a bubble market.
The people who took out the loans have often avoided personal liability and received an average of $75,000 of cash out of their home eqity, but have lost their homes. Indeed, they had been to a great extent renting their homes from the bank anyway at the time that they lost their homes.