It makes no sense to "restructure" these people so that they can continue to spend every last dime on their mortgage. If it is too much house for them, they should simply move out and rent. (A whole bunch of articles are saying how good it is to rent in a bad housing market.)
In my state there is already a system of loan restructure and re-education camp, that your lender must officially tell you about before they foreclose. As long as we're talking about those dumb people who get a big ARM they can't afford:
Now I must tell you I am in no danger, I have already rearranged my financial situation and paid these folks. I'm sure that they count me in that 1.1 million, although my story isn't told in CNN/Money, because I am a professional and am qualified for all kinds of stuff, and will make money soon and have sort of anticipated the financial situation. I am happy that they decided to give me the stupid loan. Because they did, I could continue to live in this fabulous place and soon Jacquelita will move in with me. And that's... the rest... of the story.