For over a year, the Federal Reserve has been pouring money into American mortgages. Buying "mortgage-backed securities" (MBS), financial instruments whose value is based on a pool of underlying mortgages.
When the financial crisis broke, the market for MBS dried up. Buyers feared that homeowners would default on their mortgages. Driving the value of these assets to almost nothing, or worse.
Financial institutions in America and around the world were left holding trillions of dollars worth of non-saleable MBS. It appeared these holders would be forced to mark down the value of their MBS holdings, potentially triggering another wave of bank (and pension fund, insurance provider, etc.) failures. Full article at: Mortgage Market
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