It's not like the risk of was ever disclosed to the purchaser. Oh wait.
We continue to bail out and incentivize poor decision-making, then wonder why the proportion of poor decisions seems to be increasing.
How exactly is being approved for a loan to buy a first home the fault of the purchaser?
We can shop in any grocery store trusting that the products are safe to consume. Meanwhile, banks are allowed to legally sell financial poison?
Sure, compare rates, terms, insurance, etc. But financial time bombs like you describe should be illegal. The banks should suffer the consequences of their greed. And the working class should not be left homeless as a consequence.
3rd parties will both be lacking in information and have obligations beyond just seeing the loan paid back.
Who bailed out the home owners? No-one. They lost their homes, their credit was ruined. Decades worth of setback. But they deserved it? Please. It was a trap in the name of shareholder profits.
The problem is systemic and blaming the consumer is myopic at best.
Let the US remain free where consumer choices matter. You can take a risk with an ARM mortgage and might hit it big, but you might also have to pay the price. That's freedom. People can always downgrade homes, foreclosures are not necessarily a bad thing when there is limited housing supply.
You will rarely catch me defending the banking industry... but what you're calling "financial poison" here is just how mortgages work in most of the world. A variable rate loan isn't inherently predatory, that's how most loans work.
There are many legitimate reasons a buyer might prefer a variable rate mortgage: the trade off is easy to understand. It takes ten seconds to do an internet search for "interest rates past 30 years" and see the risk. I refuse to accept that most people with ARMs were taken advantage of.