He also told me that Treasury is now considering upping the ante on the trial modifications, requiring much more documentation up front, so that banks won't have all these trial mods going with borrowers who inevitably won't reach permanent modification status.
You can't make this stuff up.
On the documentation front I think there are legitimate borrowers gripes about lost paperwork. Most servicers I heard use faxing and there is no automated way of associating the paperwork with the account in question (well, there is but none of the servicers are smart enough to implement it). Why not have document upload in their online banking account? It is a trivial technical exercise and solves the paperwork getting lost issue. If people don't have scanners to get the documents in electronic format then all the servicers with banking arms could have a scanner and computer available at each branch and solve that issue very quickly (many community groups would jump at the chance as well). The system is literally not built for the mod effort and since it is temporary not a lot is being done to invest in the infrastructure to make it run smoothly. So on that front some borrowers have a point but I think they are the minority.