Add to the never-ending List of Things That Caused the Housing Market Collapse: zoning. Specifically, zoning for too many large, expensive, single-family homes.
That kind of policy, according to a paper in the journal Housing Policy Debate, left people who wanted to live in an area with a choice of either living elsewhere or being lured by the promise of low/no payments and the idea that they could refinance when their ARMs reset.
Naturally, they chose the latter, and the data show the result: Communities zoned for those larger homes were much more likely to see foreclosures. (And that, of course, drove down property values, making it harder for people there to refinance..)