Because such collateral is almost always the mortgaged home. And demand for homes in the US has collapsed leaving the sector in a big crisis. In other words, the collateral has become a dud asset for many of these institutions.
An interesting aside is that the NRI community, among the most credit worthy sections in the U.S, is also very badly affected by this crisis. This is because the outlook towards a house that this section has is different from that of the native American. Whereas the American sees the house has just another utility, much of the NRI community sees it as another 'investment'. This is a cultural trait and it has just left the NRIs in America with red faces and plunging 'net worth'.
