The destabilizing effects of defaulting mortgages quickly spread throughout the financial system because those mortgages were involved in widespread:

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The securitization of mortgages involves the packaging and selling of mortgage-backed securities (MBS) to investors. When homeowners default on their mortgages, the value of these securities decreases, which can cause losses for investors and financial institutions that hold them. This can lead to a ripple effect throughout the financial system, as institutions that are exposed to these securities suffer losses and may face liquidity problems, potentially triggering a broader financial crisis.

The Destabilizing Effects of Defaulting Mortgages Quickly Spread Throughout the Financial