This didn't just start last year, this is a by product of low interests rates, and slow reaction by the FED to raise them during good times. Which managed to produce this highly leveraged products. In some cases only 5% assets versus 95% of debt. So if something went down in value as much as 5%, the loan basically had no collateral against it and was worthless paper. Because debt was so cheap, and interest rates were so low, they could do this and make huge sums of money. The US just didn't benefit from this these products are around all over the world. Foreign governments were in love with these same high yield products as well.
Most mortgages from pre 2003 are in decent shape, home values go up and down, but it doesn't matter till it recognizes by a sell. Market prices have fallen, but they had risen quite a lot in the last 5 years to, so it is a normal adjustment. And welcome for many people trying to buy houses in Florida, California, and Texas.Now these market adjustments in the hottest markets have threatened some morgage companies capitalization as they have to mark them to market and recognize losses even though nothing has changed with the mortgage.
The problem has been cheap money and a change in the way loans have been sold. Use to, the bank made the loan and held it. Now they just issue the morgage and then it gets sold and bunched in a bunch of other large loans to be sold over the market. Now they think they are all a certain credit rating, but they have no clue.
Now there are alot of variables i could go on and expand on, but this is the basics