One huge sticking point for any mortgage modification program is the pooling and servicing agreement (PSA). This is the document that outlines terms regarding how loans are pooled, securitized, sold to investors, and then serviced by other companies. Furthermore, one of the details many of these agreements contains makes it very difficult for certain homeowners to be given a modification.

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In fact, some pooling and servicing agreements state that no more than 5% or 10% of the loans contained in the pool can be given mortgage modifications in the case of default. So the US Treasury Department, in reporting that 9% of borrowers who qualify for plans have been offered modifications, is simply reporting information that could have been estimated just by looking into the structure of the mortgage industry.

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These PSAs set a limit to how many loan modifications can be given by servicers, and these companies may face liability from the trusts or investors that own the underlying mortgages if they offer too many workout solutions to homeowners. They may find their company in breach of the servicing terms they agreed to, even though it would allow more borrowers to stop foreclosure, and they are not willing to take this risk.