Buffett's Not Insurers' Only Hope

Challenges, however, abound with Stefalin's plan. It would be difficult to raise funds, coordinate buying and distribute returns among the financial parties involved, but it does attempt to strike at the center of the mortgage dilemma, notes David Vang, professor and chairman of the Finance Department at University of St. Thomas Opus College of Business.

"One way or another, the market has to take its losses, and selling the properties at a discount and getting their risk off their books seems like a good solution," Vang says.

Other solutions include Ambac, MBIA and other bond insurers unwinding a portion of their structured portfolios in CDOs and asset-backed paper to investor groups in exchange for warrants or shares in the companies, notes Rob Haines, senior analyst at CreditSights.

Whether any of these plans come to fruition remains to be seen. But investors should be heartened that ideas are being floated in a market once befuddled by fear and uncertainty.

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