The whole house situation and the economy?

I'm a regular guy with little knowledge in economics and finance. Back in 2005, i was talking to my friend about how homes keep on rising. I wondered how come? Are people getting wages increases? NO. My friend told me banks and mortgage companys are giving out loans to anyone like candy and people are taking out these weird loans called ARM'S. I asked what is a arm? He said it's when you pay only interest on your mortgage and none towards the principle of loan. I thought that was crazy. My friend said people think they will just sell it in five years when their house goes up in value. Makes sense right? lol. Ok but at some point everyone can't seel their house for a higher price because all these arms aren't up at the same time. i believe, that alot of the higher ups in these banks knew this was invetibable and didnt' care because they would get their 20 million dollor bonuses and keep it up for a couple of years and when it all collapsed they would just take off. Anyway, my point is. Is this house situation the biggest robbery/ heist of the century.