Loan Modification

A better business model?one that might attract more entrants and increase competition?would more closely tie expenses with compensation and reduce many of the principal-agent problems that currently exist. Rather than rolling most of the compensation into one annual fee that covers performing and delinquent loans alike, servicers could be compensated quite modestly for the routine processing of payments involved with performing assets.

...

Another structural change that would help would be a limit on the extent to which servicers have to advance principal and interest on non-performing loans. In times of high delinquency, this can put considerable financial strain on servicers, which can lead to negative consequences for consumers trying to work with those stressed servicers.