So lets get this straight. Mortgages go in the shitter. All of the private lenders bail out and sell off their mortgage backed securities. The only thing saving them from completely tanking is that Freddie and Fannie, being government sponsored, have to buy them up. Now you want to let them fold? What happens if mortgages aren’t profitable? In a pure capitalist economy, they disappear. This is the rare case where the government has to step in for the greater good and save the market makers.