The banks themselves who made the loans didn't know what they were doing which is why they started collapsing.
I don't know if I agree with this. The banks are businesses, loans are products, and they sold as many as they could to make their numbers. It's all about the business.
However, common sense flew out the window. I recall one couple who bought a house in 2003 or so. They couldn't afford it, had no money for a down payment, and we all asked them how they did it. They said it was easy. I agree, they were preyed upon, but they had a lot of people tell them that it sounded like a suspicious loan if they could get one. They took offense to this.
They filed for bankruptcy a year later.