What happened to

those homeowners who defaulted on the loans? Have they all been sued by the respective banks Or have they all filed for bankruptcy?

no, I think they have been thrown off on to the curb.

What exactly do you mean? Could you elaborate please?

Unlike Australia (I’ve heard), mortgages are non-recourse in US which makes for a more aggressive home buying/borrowing environment.

once foreclosure process is complete the bank takes ownership of the property- thats part of the spiral effect, bc as more homes are REO (bank owned) and soled at firesale px’s since banks don want them on their balance sheets it continues to depress area’s home values- therefor making it more likely that neighbors who are having troubles just quit paying their mortgages as they see their equity fall to zero and they figure they have nothing to loose but their negative equity and mediocre credit. The actual process can take a while though, especially if it is not owner occupied- ie owner is renting it out to tenants. It depends on the state but it can get really drawn out from what I’ve read. Serious legal pain in the @ss. But the non-recourse thing I’m not so sure about. The bank gets its collateral (the house). If you are referring to them being able to go after the owner for other assets I don’t know.