[bequanna]

They didn’t “sell them to the government”.

However, the Fed was actually a large purchaser of MBS if that is what you’re referring to.

[blindriver]

Okay it's technically not a part of the government, but it's a Government Sponsored Entity with public ownership. All mortgages bought by them have an implied guarantee by the US government.

So they did sell them to "a government-sponsored entity and the US government has an implied guarantee to pay any defaults."