Ethics, compassion, and math.
The banks made a bunch of bad loans, which, if they default, will cost the banks six figures each. Knocking 3% off of a $200,000 mortgage for five years costs the banks $30,000. So the banks must have projected that one-third of the ‘at-risk’ loans would have gone into default.
This is not about compassion for the little guy. The best thing for many struggling families, who are upside down on their homes, is to walk away and rent an apartment.