Even scarier is that I've read some accounts that say those bonds had Puts embedded in them as part of standard issue. Meaning the banks might have to buy them back even if there wasn't fraud. There is speculation, and it's speculation, that banks agreed to the buy back provision (a Put) as part of the accounting shenanigans that let them take those bonds off their balance sheet.
But unfortunately, the "freeze" is just another fraud - and like the other bailout proposals, it has nothing to do with U.S. house prices, with "working families," keeping people in their homes or any of that nonsense.
The sole goal of the freeze is to prevent owners of mortgage-backed securities, many of them foreigners, from suing U.S. banks and forcing them to buy back worthless mortgage securities at face value - right now almost 10 times their market worth.
The ticking time bomb in the U.S. banking system is not resetting subprime mortgage rates. The real problem is the contractual ability of investors in mortgage bonds to require banks to buy back the loans at face value if there was fraud in the origination process.