Is that really better though. The banks are taking 20%+ hit either way, so they can work with the current owner or take the hit with a new owner. I know each case is different and my understanding of this part of the economy is very basic as best, but it just seems that less damage is done somehow salvaging the current homeowners. Granted, each case is unique and some may not be salvageable.
The point is it is not right for government to step in and abrogate a contract. Not good at all. If mortgage holder choose to work with homeowner who is behind, that is their business, literally.
It is government interference in the lending process that created this mess in the first place. All government interference in the free interaction between individuals is an attempt to cheat reality and a play for power. In the long run creates disaster. It is scary that we are having this discussion on a conservative sight.