It started with the Clintoon administration and the idea that everyone has the "right" to home ownership.
Left-wing special interest groups like A.C.O.R.N., started pressuring (shouting racism) major lending institutions into loaning to those who wouldn't otherwise qualify for mortgage loans. Couple this with Alan Greenspan lowering interest rates fourteen times in a row to an artificial level and you have a real estate market that is artifically heated. Hey, if all one has to do to qualify for a loan is to breathe onto a mirror, and if the mirror steams up, that's enough to qualify for a $500,000 loan, even though one is flipping hamburgers at MacDonalds, what is to be expected other than massive amounts of foreclosures when the rates on adjustable rate mortgages go up?
Both Republicans and Democrats in the congress supported this, but especially so Chris Dodd, Barney Frank and Barak Obama.
When the shit finally started to hit the fan, the Bush administration tried to put on the brakes, but Dodd, Frank and Obama refused to comply by pulling in the reigns on Fannie Mae and Freddie Mac.
The party continued on.
Once the adjustable rate mortgages, with their "teaser rates" adjusted to a higher rate, the mortgage payments couldn't be met and the foreclosure debacle began.
Again, this is a problem caused by government bureaucrats and politicians, mainly Democrats, in tune with special interests. And they are the exact ones who are now blaming the free market for the failure of the housing market when the truth is, government's hands were all over it.