If you're going to do Socialism, at least give the money to the poor people. To quote Dodgefan, "It's not so much that I care about what you're doing, it's the stupid way you're doing it."
Actually, there were a lot of people who were duped by mortgage brokers and real estate agents. There were papers slipped in at the last minute and signatures that "magically" jumped from document to document. That isn't to say there weren't dumb consumers.... but fraud in the industry was rampant.
This is the deregulation I was speaking to earlier. Mortgage brokers sold bad loans to people who were fraudulently representing their income to the banks. The banks would then package up a group of these mortgages into financial funds and sell the fund to some other institution. At this point, the visibility of who the mortgages are written to disappears. These funds would get traded around to other institutions, portioned out, repackaged with others, and resold. The funds were then rated as AAA by the financial ratings agencies....because these securities are backed by real estate and real estate never goes down in value.... "they aren't making more land" <insert cheesy salesman laugh here>. Now if you're a bank and you KNOW you're going to package these mortgages up and sell them to some poor schmuck who walks by, what do you care if the mortgage was based on fraud?
Now you get a new job and start filling out the 401k paperwork and see this highly rated fund that's backed with real estate. Sounds like a good thing to bank your retirement on...right? Well, lots of people did.
Government and Corporate were in it together. We probably wouldn't be where we are if there hadn't been a concerted effort <NAFTA> to keep the wages of the middle and lower classes down. I'm not saying this was a cause, but the situation wouldn't be nearly as dire had wages kept up with inflation.