Yep. It’s a shame, but what can you do?
If it were me? I would pass a law that encouraged banks to re-structure the outstanding loans in a way similar to what they did in Third World countries.
This is no simple thing, since it would require an army of mortgage people to sit down with every-single-subprime mortgage holder, assess the loan and negotiate a deal. This is no quick fix — it actually requires work.
On the other hand, it doesn’t require the gubmint to put up billions for a bail out.
Investors (suckers) bought them. Buyer beware. Bet they won't do that again. It would have been in immoral act to let them keep their money, they were lucky to get together with it in the first place.
Whoever owns the mortgages needs to assess them. In a few cases re-structuring might be the best way to mitigate the loss.
Generally they just need to bite the bullet, take the house in due course, and sell it for whatever they can get.