Some “bankers and lending institutions” initiated the mortgages, but for the most part immediately packaged as many of those mortgages as they could into bonds and sold them to foreigners, pension funds, etc. That’s the letter you get about a month after your first payment telling you to start sending it to a new address.
Yes, but it is still those financial institutions who are managing those portfolio of loans they securitized and sold to investors. And yes, investors were also involved in coming up with this plan. Is everyone happy? No. But the reality is, this is just the first step. Investors and banks are gonna have to make more concessions to more people or they will be stuck with notes that are worth only a fraction of what they are right now. Foreclosing is not only an expensive process, the amount they recoup from selling the foreclosed home is usually only about 1/2 of its market value.