This set in motion a chain of events in which subprime borrowers increasingly fell behind on their commitments and certain types of securitised assets and structured products started to show their true colour. As these assets stopped performing (or, at best, paid significantly less than previously projected) investor appetite for structured products and securitised assets diminished rapidly.
This interrupted the process in which original lenders (mortgage originators) could so comfortably extend a loan and sell it off to somebody else to carry the credit risk. Liquidity in that market evaporated rather quickly, its previously smooth-running machinery grinding to a halt.