There is a problem with your statement:

If a mortgage company and a debtor want to modify their contract, I'm all for it.  If the government is behind the scenes twisting arms, it's nothing but trouble.

The mortgage companies are really nothing more than servicers these days.  The real people with the interest in the payments are the investors that happened to buy the Mortgage Backed Securities.  It is clearly in their best interest to modify the loans, because ultimately, they will get a better return than a sheriff's sale.  Part of the problem is that we don't know who is making the modification decisions, or even who has the right to make those decisions anymore.  Its all burried in a mile-high stack of contracts and paperwork.

There have been situations where servicers have just plainly said, "we don't have the right to offer a modification under the terms of the pooling and servicing agreement."

So, I would agree with you if the mortgage companies still held the debt.  And I think they would be more inclined to negotiate the modifications if the risk of loss were still with them.  But, today, I think you need the government intervention to set policies for modification because that is practially the only way it will happen.

Best,
Robert A. Franco
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