That’s essentially the solution of Richard Bove, an analyst at Punk Ziegel & Co: Bove proposes refinancing subprime borrowers with government-backed loans at an interest rate of 1 percent. … Under the plan, the Federal Housing Administration would guarantee the loans and the banks would pay off all outstanding housing debt on the home. The new loan would be bought by the Government National Mortgage Association, or Ginnie Mae. Ginnie Mae would then repackage the loans into a bond paying a mark

More: continued here