Right, but it wasn't the homes that caused it (mostly) - it was the leveraging via securities that did it. As I recall:
1) You have the loan
2) Then you have an insurance against that loan
3) Then you have a security that essentially betting on that insurance
Yes, it sucks for the bank if the loan wasn't paid back, but they are insured against failure via #2. Yes, it sucks to have to pay the insurance to the banks, and Fannie Mae, Freddie Mac, and AIG may have still been in trouble. However, the mortgage backed security that bet on the insurance that could be leveraged as many times as the market was willing... that's where the damage was done.
If you take a loan and insurance on those loans, they are easily calculatable maximum losses. That means you can easily hedge it or keep enough equity to pay off losses. However, the mortgage-backed securities had unlimited loss and profit potential. And those who were long on those securities ****ing lost their asses. They were supposed to be AAA-rated, near guaranteed return on investment, so you can go long as **** on those, not be terribly hedged, leverage the **** out of it, and feel good about getting a nice ROI.
Except they didn't. They lost everything. Everyone went under. The stock market plunged. Banks stopped lending. It was a **** show. I could be wrong, Papa Bull, but I would bet the actual money lost on housing was a small percentage of the money compared to that which was lost on the mortgage-backed securities.