This might make understanding easier.

Start 100M mortgages. 100M bonds (in reality for "safety" it was more like 95M in bonds.) 80M was part of the upper class. 20M was part of the lower class.

If 30M of mortgages went busto without EVER paying a single payment and houses sold were worth 20M then 100% of the lower class got destroyed. Assuming the other 70M worth of mortgage holders kept paying until principle was returned the upper class never saw a single cent of loss and the lower class never gets paid a single cent of principle or interest.

It is a clever piece of financial engineering that allows risky loans to be "safe." It is also why writeoffs can be complete for the lower class even though the asset (house) is sold with a positive value.