It looks like the Feds are in the process of creating a company to buy unwanted assets of financial institutions. The Feds have done this before; back in the 1930s they created the Home Owners Loan Corp to issue bonds to refinance people and the Resolution Trust Corp to sell off failed bank assets.
An article in CNNMoney states that if they were to create such a corporation it would buy unwatned mortgage backed security assets from financial institutions in an auction format. Basically the company willing to sell at the lowest price to the new corporation would win the auction and rid themselves of the bad mortgages.
If this were to happen the new government corporation could then resell those assets back to the market when it wanted to. They would also open options for those borrowers whose mortgage loans it does hold to refinance into a lower risk government insured mortgage, possibly an FHA Refinance.
What do you think about this?