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The “collapse” in housing was caused long before when the decision was made to:

1) lend to people who could not (or would not) repay;

2) to set policy at Fanny and Freddie where they would buy loans with insufficient margin between what the home was worth and the loan amount so that should housing in a locale suffer from a decline in value the (”Loan to value” ratio — LTV) that the homeowner too easily would have negative equity;

3) to force foreclosure too quickly on loans that went upside down even when the homeowner was servicing the loan and indicated a willingness to continue doing so;

4) to allow people to walk away from their loans too easily.

All of these factors, every single one of them, were due to political intrusion into the loan business. This was all enabled by a pliant Federal Reserve whose management was willing to finance the whole thing.

Blaming the banks or Wall Street for the housing debacle is like blaming a tall building for murder when the victim gets taken to the roof and pushed off. All the greed and all the taxpayer-funded bonus fraud took place *after* government policy initiatives set the groundwork. Indeed Fanny, Freddy, the Office of Thrift Supervision, the Treasury Department, the Office of Civil Rights Enforcement and the Federal Reserve all had to enlist the mortgage originators, loan processors to do their loan origination and processing. If the loan packagers hadn’t existed, the government would have had to set up their own offices to move the paper.

Don’t forget that at its nadir, loans were being originated where the applicant had no income, no assets and no job. Banks were forced by Treasury to subcontract origination in urban areas to community activist groups such as the fraud-riddled ACORN. You will recall them.

see for example:

Housing Bubble, Financial Crisis – What Happened, Who is Responsible

...
n 1995, the Clinton Administration changed the law governing GSEs’ mission — the Community Reinvestment Act (CRA) — to encourage more lending in poor neighborhoods. Previously, the CRA directed government to monitor banks’ lending practices to make sure they did not violate fair lending rules in poor neighborhoods. With the 1995 change, the government published each bank’s lending activity and started giving bank ratings based primarily upon the amount of lending it performed in poor neighborhoods. These changes empowered community organizations, such as ACORN, to pressure banks to increase lending activities in poorer neighborhoods — which involved reducing mortgage loan standards — or face backlash from those organizations’ private and political associates. For instance, if Chase made 100 mortgages in a poor Chicago district, and Countrywide 150, the government would likely give Chase a lower CRA rating, and community organizers could pressure politicians to make it more difficult for Chase to get licensed to do full ranges of business in new areas of the country. Low CRA ratings could also disadvantage Chase with regard to government lending programs and make it more difficult for Chase to participate in mergers and acquisitions.

Through Fannie Mae, the government controlled banks’ mortgage lending activity rates. As long as Fannie was willing to buy these mortgages, banks had no problem lowering their standards if necessary, making the loans and selling them off to Fannie Mae...

http://tjhancock.wordpress.com/housing-bubble-financial-crisis-detailed-comprehensive-assessment/