Mortgage Lenders Face Long Rehab

Bove also recalls a boom of second-mortgage lending in the 1980s, as well as scandals throughout the years surrounding lenders practicing "red-lining," or discriminating against borrowers in immigrant or low-income neighborhoods.

Bianco Research's James Bianco might agree, as long as the government doesn't wrap its arms too tightly around the current problem.

"If you want to look to the other side of the valley, there will be a day that comes when things are going swimmingly, and the mortgage industry is going to want to have some flexibility in product offers," he says. "They won't have that flexibility if the industry is hemmed in with restrictions about Fannie and Freddie guaranteed mortgages."