Confused

I heard today that 10 million more American families could lose their homes to foreclosure because the value of their homes is falling. I am confused. How did we ever get away from downpayments and borrowing on the the rest of the sale price? I know the banks used to check to make sure the house was worth what you paid, but that was to control their risk. Should you default, they could recoup the money by selling the home.

Now, the value of my house has declined ... a lot. So what, I still make my payments and stay in the house and hope that someday it will regain its value. I am just confused as to how the value of the house is related to my ability to pay the mortgage. Did some genius figure out how to scale payments based on the value of the home?

I am just confused.