You wrote: in the end the banks investors are going to be left holding the bag.
Exactly. And this is why we are seeing that although the rates on the 10yr are going down, mortgage rates haven’t gone down. All these workouts, bailouts and other programs in the end will make buying mortgages less attractive. And that’s why in the end they won’t stop the housing decline. (If investors don’t buy mortgages then the price of mortgages goes up. If the price of mortgages goes up, then the housing decline accelerates.)
