Could The Treasury Modify Mortgages?

My guess as I mentioned in my previous post is that that I highly doubt it but the article below was very interesting. 

“Here’s an idea being pushed by John Taylor, chief executive of the National Community Reinvestment Coalition, which represents local organizations that promote affordable housing and community development. Mr. Taylor wants the U.S. Treasury to buy large numbers of troubled mortgages at a discount to face value and then ease the terms to make them affordable for the borrowers, including in many cases by reducing the principal to something nearer the current value of the home. After it reworks the mortgages into “sustainable” form, the Treasury could then package and sell them to investors, Mr. Taylor says.”

Could this work?  Anything is possible but I think it really could, however, not with the Treasury handling it for the exact same reasons outlined in the article.  I wrote about someone who is doing this already: 

“The mission is simple: to buy delinquent mortgages at a deep discount, work with homeowners to get them paying again, and resell the now stable loans for profit. To get homeowners to do their part, Ranieri is taking the radical step of substantially lowering their mortgage balances.”

And he is actually going to reduce the principle balances.  That, in my opinion, is the only way to make them “stable” loans again.  This is pretty funny.  “It’s not just theory. Ranieri is also doing the “manual labor,” enlisting a handpicked team of workout specialists who bill themselves as “servicers with a soul” and behave more like sunny salespeople than bill collectors.”