There is something going on with the banks and freddie mac & Fannie mae. The last I read the Gov't owns a very high proportion of these mortgages foreclosed on. The banks really have no skin in the game as they have been repaid by fannie and freddie.
The banks are merely the processors of these mortgages.
They can not even sell foreclosed homes at auction in Detroit City for $500.00. If these banks work a renegotiaton which the people remaing in the foreclosed homes the banks gain in the end.

If it were not for Fannie and Freddie and the fed gov't there would have been bank failure rates close to 80% I would say.
I think the federal gov't and taxpayers are heavily invested in these banks. More than they let on.
Pretty much why banks go along with the federal gov't and regulations like they do.

would be interesting to see who the government sells these houses to.
There are pros and cons to regulation and de-regulation, when put into the wrong hands things can go awry fairly quick.

The way I see it sully the gov't could direct these banks ( the processors) to reset these mortgages to the people foreclosed on. Reset the mortgages to no back payments and interest repaid. Reset at the principal bal due and start anew on mortgage payments.
If the woman in the article were thrown out she obviously would be qualified for housing assistance being in the current financial situation she is in. What would housing assistance cost? $500.00 a month or more.
Would be best to leave her in her home doing her own house repairs and start paying on the mortgage when her employment allows. It's a win situation if the gov't owns the mortgage.