The financial collapse did not happen because home mortgages were "bad." It happened because the banks used the assets they represented as the basis of a pyramid scheme that was way more complicated and way more crooked than any classic Ponzi scheme. If miraculously everybody suddenly paid off their mortgages, the banking system would have collapsed overnight, just as if all the investors in a Ponzi managed to pull out. The banks wanted to write a lot of those mortgages because they generated many dollars in electronic "money" for every dollar they lent out, and their executives and shareholders redeemed the fictional money for the real stuff at the other end.
They weren't just betting that people wouldn't default. They were also betting that they'd never pay off their loans. Either one would undermine the pyramid.
The middle class was offered increased credit as income stagnated, and wealth was siphoned out of the economy by the credit "industry."
Taking OUT a mortgage was INPUT into the system by which banks took money from the economy. They were marketed the way they were because every new loan taken out was a gift to the bank.
It seems like the summary explanation of credit default swaps and the derivatives market and the whole house of cards is that the banks borrowed multiple times using the same collateral (something you or I can't do, for good reason), and then borrowed again using the funds borrowed as collateral, and the resources eventually looked infinite, so they could pay themselves some fraction of infinity for their ingenuity.
Someone should be screaming from the rooftops: The insurance companies are doing the same thing!
Henry Ford said: "A business that makes nothing but money is a poor business." But that is what our entire economy has come to be designed around, concentrating wealth in a very few places. Banking, energy and insurance industries are designed to do covertly what the gambling industry does overtly, treat the extraction of wealth as their mission.