In the previous few years there was a culture of indebtedness and easy money from banks, both in home loans and home equity loans. This produced a buble, especially in housing prices. When this bubble popped, people could not pay back their loans.
The debt loaned out but not repaid is now rolling uphill like a reverse avalance, tracking back to the people who have loaned money, but can't get it back.
The top of this hill, the ultimate lender, is the Fed and Treasury. Eventually, the debts will go back to them, since the money for the original loans is fiat money created by the Treasury.
And, in the end, the Feds will pay for all this with printed money. Meaning inflation.