A Failure Of Capitalism, Ctd

A reader writes:

I am a tax preparer in NYC and I deal with other peoples' money.  Mr. Posner blames rates, government, fed, etc.  I got a new customer last year.  He told me that his house was foreclosed.  I asked him:
"What is your income"

- I have no stated income. I work for cash.
- How much did you put down?
- Nothing.

Or a home attendant with income of $30K who owns two houses in NYC each of them she bought for $450K. Or a car mechanic with a stated income of $45K who owns three properties: two in NYC and one in Florida which he rents.  While the mortgage rate was 1.5% (exotic mortgages), they were able to handle the mortgages.  But after the rates were adjusted, they can not afford them anymore. 

I have only one question: who gave them the mortgages in the first place? 

One more point.  The interest rates were low for everybody.  Why not all the banks are having these problems?.  I do not think that privately owned banks are having these problem