What institution will underwrite low grade MBS CDO going forward?

Will anyone with a not so great income or shady credit be able to get a mortgage loan in the next say 10 years?

 

Sure, in the next business cycle, assuming we have one. It will be harder to sell CDO's likely.

 

They will change the market to covered bonds as in europe where the issuer guarentees the credit. No loans for illegal immigrants anymore!
The US government should ask the CME to start trading CDS now that they have taken over AIG. It will attract a lot of new capital, especially at theses levels to the market.