The cause of the skyrocketing mortgage default rates was:

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All of the above factors contributed to the skyrocketing mortgage default rates. Government programs such as Fannie Mae and Freddie Mac encouraged and subsidized home ownership for renters who were not necessarily financially stable enough to afford the home loans they were receiving. Declining real estate values led to homeowners being underwater with their mortgages, meaning they owed more on their homes than they were worth. This made it difficult for homeowners to sell their homes or refinance their mortgages. Bad incentives provided by mortgage-backed bonds, such as adjustable rate mortgages and no documentation loans, incentivized lenders to give out risky mortgages to unqualified borrowers.

The Cause of the Skyrocketing Mortgage Default Rates Was