this comment, which you did qualify with "sometimes" is only ONE scenario:
and then they loan it (sometimes) to people who are in bad financial situations
Remember that there were several other and more common scenarios:
* Loans people COULD afford at the time but they were adjustable (ARM) and got out of hand. With the bad economy their own incomes didn't match what they expected in signing for an adjustable mortgage.
* Loans people COULD afford but then the bad economy happened and one or both incomes ended.
* Loans people COULD afford but then they ran into a financial problem for one or more months (say with some emergency extra expenses), and with fees and penalties got set permanently back -- or bad enough that they couldn't recoup. Remember that the banks are being absolutely UNFORGIVING on these things.
* Loans people COULD afford but then housing bubble burst and suddenly they were underwater -- owed more on their houses than the current market value. Continue paying these exorbitant prices, or -- ?? OR, WORSE, needing to sell for some reason (job moving?) but can't under those circumstances.
One of the most important things to remember is how inflexible and intractable and corrupt the banks have been. The HAMP program -- federal money given to the banks to use to help homeowners who COULD continue to keep their homes -- have simply not been used to any extent. Why? If there was much equity, the banks WANTED those homes.
There've been cases where the banks have foreclosed on houses they didn't hold the mortgage on in the first place (and I'm not just talking about missing paperwork), houses that were fully paid off, and houses on which the owner had never missed or been late on a payment. IOW, they have been gleefully STEALING people's homes, and I see no end in sight.
The "homes they couldn't afford" meme is the 1% explanation, designed to blame the victims and obfuscate their criminality.
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