Final answer:
The Financial Crisis of 2007-2009 was marked by a significant decline in house values, which impaired mortgage-backed securities and led to a global decrease in lending and credit availability.
Step-by-step explanation:
During the Financial Crisis of 2007-2009, the value of houses declined, causing the mortgage-backed securities to lose value. This decline in home values began in 2007, with many home prices falling below the amount borrowers owed on their mortgages. Consequently, homeowners defaulted on their loans, leading to a significant drop in the banks' assets.
This, coupled with the collapse in housing prices, undermined the value of mortgage-backed securities, which were widely held by financial institutions. The fallout was a massive reduction in lending and availability of credit, precipitating economic turmoil not only in the United States but globally, especially in countries like Iceland, Ireland, the United Kingdom, Spain, Portugal, and Greece.