I'm against the government bailing out any businesses or individuals who risked it all. Too many of the mortgages are...shall we say...garbage at worst and "questionable" at best.
All this talk of "buyouts" and "handouts" and "rate increases" are only postponing the pain and unfairly dumping more debt on future generations.
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I was speaking only of bailout of mortgage insurers. The insurers on the whole followed Fannie/Freddie guidelines. The Banks underwrite the loans, (sold on secondary to Fannie) subject to MI approval. Matter of fact, most Banks had MI companies underwrite the entire loans on their behalf.
If MI companies fold, it trickles right down to Fannie and Freddie, and it becomes the gov'ts problem anyway. Without mortgage insurance, you step back in time to the Depression era. IF, and I say IF with great hesitancy, MI companies folded, they would have to intervene anyway.
I don't agree with Kramers plan to sell shares to Warren Buffett, but it is entirely possible to sell MI back securities. Also, lower the LTV to 75% instead of 80% and increase rates in 5% increments as they are done now. Mortgage interest rates are at historic lows, housing prices are down. An increase in MI rates shouldn't impact someone's payment that significantly.