America’s housing system still has not been properly reformed

Thus $500k 800 sq ft bungalows. You show me a chronic bubble and I'll show you a 'market' riven with subsidies, tax incentives, government secured debt and pencil whipping regulators. Healthcare, education, housing.... Yet when the bubble pops and the too-big-to-fails have to be 'recapitalized' all we get from the ruling class is more hating on markets.

Your last sentence is interesting:

the fact that too many economies rely on them to fall

I believe you meant that banks can't be permitted to fail. But it could also be read to mean that what we've self inflicted is a system whereby the greater fools are those found holding worthless CDOs (and all of their various derivatives) when the bubble pops; the market is ultimately expressing itself through the failure of financial institutions.

The current environment offers housing borrowers money at a price below the market.

The simplest bet with this cash (buying a house and holding) has probably been overdone in the market. House prices are quite high now.

Still, small but crafty borrowers should be able to profit with this cheap money.

Note: Those are conventional financing limits. Anything above that ($417,000 nationwide, with exceptions as high as $625,500 in certain high-priced markets) is considered a "jumbo" loan, and is typically not government/GSE backed.

Before the last crash, you could get "no paperwork" mortgages, you'd just to have a little higher interest rate. Lenders would also squeeze people into ARMs so their initial rates were really low and then would go up after the adjustment period. And nobody cared about things like PMI because prices were going up so quickly. You'd have enough equity in your house if a few years and the PMI would go away.

The general consensus was that if you were in the market to buy, you should buy as soon as possible before prices went up much more.

Thankfully, I live in an area that didn't see the enormous run up of house values. The crash affected our housing and we still had the normal negative effects of a big recession. Housing prices have certainly recovered by now and I do wonder how much of it is still smoke and mirrors. But in markets like Florida and Arizona where house prices got really out of control, have those areas also recovered? That would be more shocking to me.

So the guy in the movie got the bank to write him an insurance policy on the mortgages (really mortgage derivatives) that other people held. When those mortgages failed, the policy paid out.