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Oh. So maybe the housing bust wasn’t just all the evil banks’ fault, after all.

A new federal report shows that speculative real estate investors played a larger role than originally thought in driving the housing bubble that led to record foreclosures and sent economies plummeting in Nevada, California, Arizona, Florida and other states.

Researchers with the Federal Reserve Bank of New York found that investors who used low-down-payment, subprime credit to purchase multiple residential properties helped inflate home prices and are largely to blame for the recession. . . .

More than a third of all U.S. home mortgages granted in 2006 went to people who already owned at least one house, according to the report. In Arizona, California, Florida and Nevada, where average home prices more than doubled from 2000 to 2006, investors made up nearly half of all mortgage-backed purchases during the housing bubble. Buyers owning three or more properties represented the fastest-growing segment of homeowners during that time.

“This may have allowed the bubble to inflate further, which caused millions of owner-occupants to pay more if they wanted to buy a home for their family,” the researchers noted. [Emph. added]

You mean defaulting borrowers weren’t all hapless victims? This is the sort of news that’s liable to make Elizabeth Warren’s head explode. Further, the A.P. plays down the level of fraud that was apparently involved in the wave of speculator/investor purchases that occurred at the market’s peak. According to a blog post by the study’s authors on the N.Y. Fed’s website, in 2007 less than 20% of non-prime mortgage applicants indicated that they wouldn’t be occupying the properties to be mortgaged–even though nearly 50% of nonprime applicants had a first mortgage on a different property. Not all those people were lying about their occupancy plans, but a lot of them sure were. . . . Remember, too, that once home prices turned down, the marginal propensity of (extremely highly levered) property speculators to default shoots through the roof. Which is of course what happened. I somehow doubt the Occupy folks will be hassling these people, however. . . .