Should we do mortgages like the Danes do?

Finally, the asymmetric nature of American mortgages is replaced by what the Danes call the Principle of Balance. Every mortgage is instantly converted into a security of the same amount and the two remain interchangeable at all times. Homeowners can retire mortgages not only by paying them off, but also by buying an equivalent face amount of bonds at market price. Because the value of homes and the associated mortgage bonds tend to move in the same direction, homeowners should not end up with negative equity in their homes. To state it more clearly, as home prices decline, the amount that a homeowner must spend to retire his mortgage decreases because he can buy the bonds at lower prices.
.
I'm somewhat unclear on this.
.
So say I buy a house for 100,000 and a security is established for $100,000 broken into say 1000 bonds ($100 each). Each bond then pays a fixed amount every year say $6 (6% interest). The value of the bonds when property values go down, what causes the bond value to go down. So if I pay off $10,000 of my mortgage, the security value is now worth $90,000, so now the bond price is about $90 (thus returning 5.40 a year).
.
Now I don't understand how the value of the house affects the bond prices. If the home value is now 'worth' $80,000, how does this affect the $90,000 security? Does the value of the bond decrease because the risk of foreclosure is now increased? Or is this guided by some other force? If it's another force does this also affect things if the price of the home goes up or is it capped at the original amount?
.
-MBirchmeier

Higher interest rates means lower bond prices. But bad credit increases the risk premium that investors will demand, and hence higher interest rates. If the mortgage is non-recourse, as most first mortgages are in the US, then the loan is secured only by the property. If the value of the property goes down, then the bond is secured by a less valuable collateral, and hence becomes riskier to hold. It's like the gold standard, if a country loses half their gold, their outstanding currency needs to be discounted since it's backed by less gold and the chance that not everyone can redeem their money is increased. These countries then need to offer higher interest rates to entice people to hold their currency.