U.S. "buying bad mortgages?" Will U.S. be doing foreclosures?

[gulliver]

This is probably a dumb question, but if the U.S. government "buys bad mortgages" doesn't that mean that the U.S. government will effectively be foreclosing on the mortgages?

Why can't the government back up the loans just enough to keep them current without actually buying them? If the mortgages weren't "bad" then the companies who hold them would no longer be holding bad mortgages. Any financial experts around here?

[MUAD_DIB]

1. No, silly...

They'll get BlackWater to do the foreclosures.

:sarcasm:

[Loge23]

2. It remains to be seen

This is one those "details" that still have be worked out.
The FED may opt to negotiate new terms with the holders of some of these mortgages.
No one really knows right now as this is indeed, a Brave New World for all of us.
The buyout provision, I believe, had to be. With the enormous amount of money this is costing us, the FED feels that there may eventually be value down the road with some of these notes. After all, if we just backed them, any profits that may materialize (that's a big "may") would then go to the companies.