That is unfortunate. It has been my view since this subprime crisis started and Bush's government declared that they want to help the people who commited themselves to these reset interest rates, that the best and quickest way out of this mess would be for the Fed to buy these mortgages, cancel them and reissue them at the normal market rates. They should be able to buy them at a good discount since the have almost no value at the moment. This would act as kind of punisment to the current holders for failing to properly evaluate the risk associated with the product they bought.
It would remove risky paper and give the existing mortage holders a chance to hang on to their housis, thus reducing downward pressure on US house prices.
Instead of helping the mortgage holders, the Fed is proping up the culprits and has done precious little to keep the people in their houses. This lame exuse about not having legal authority could have been fixed 1) by change in legislation, or 2) seting up intermidiary govt agency to go as a go-between.
They could even make a profit out of this because the replacement morgtages would not defaut and would pay back what they borrowed in full with reasonable interest.
But it looks more and more that it will end as it always does. Rich get richer and poor and ordinary people will end holding the can.
