Brokers were writing loans for people and qualifying them based on their ability to pay the 1%-2% minimum payment. When the minimum payment increases each year, faster than the non existent wage increases you start to have problems. When the loans recast in 3 to 5 years, and go from 1-2% to 5-7%, you have a huge problem. Note that the 2004 loans recast in 2007. What does this tell you about what is going to happen in 2009?

Note that this is assuming that the brokers where honest in the first place. In many cases, brokers were writing stated income loans and telling the borrower what they had to write in as their income to get the loan.

And the oil prices go up because the dollar falls.