When did real estate (which is supposedly the basis for mortgage-backed securities) become “valueless”? Something doesn’t make sense here. Could part of the fear be that the Government will prevent banks from foreclosing on people who can’t pay their mortgages?
It’s not that it’s valueless; it’s that you can’t sell it without a loss, generally.
The question of title ownership on mortgage investment packages is somewhat unsettled. Even for the banks holding title it’s worthless to them unless they can sell the property or get someone to rent. Property is debt until settled and they still have to pay property taxes and upkeep so it’s a long-term draw on bank assets. Property taxes is the ugly underbelly of property. The banks know this and want convertible debt. That’s difficult now so they’re stuck holding the property debt bag.