Christopher L. Foote, Kristopher S. Gerardi, and Paul S. Willen of the Boston Fed write,

the facts refute the popular story that the crisis resulted from financial industry insiders deceiving uninformed mortgage borrowers and investors. Instead, they argue that borrowers and investors made decisions that were rational and logical given their ex post overly optimistic beliefs about house prices

This paper from last year was cited the other day by Scott Sumner.

One quibble I have is that the paper makes it sound as if the only variable that shifted during the run-up to the crisis was house price expectations. In fact, the proportion of loans with down payments less than 10 percent shot up (even the authors have a figure showing that the market share of loans with down payments under 5 percent nearly doubled, to almost 30 percent of loans, in just four years–from 2002 to 2006), the proportion of loans backed by non-owner-occupied properties (i.e., speculative investments) went from roughly 5 percent to roughly 15 percent, and the proportion of loans that went to borrowers with lower credit scores also rose.

Of course, the expectations of rising home prices helped fuel the decline in lending standards, because you cannot be punished for making a bad loan in a rising market. And the deterioration in lending standards helped fuel rising home prices, because it broadened the market to buy homes. Hence the bubble.