People bought houses who should have never been approved. Little to nothing down/ no credit check/ no job/ no nothing and then they are given a 200k + loan. The interest rate of said loan is not fixed and wham they can no longer afford their house. What a surprise. The people who originated their loan had in turn bundled up many of these junk (sub-prime) loans and sold them to larger banks/lenders.
No oversight/no problem, as long as the market and interest rates are going along fine.