Shaun Donovan, Secretary of Housing and Urban Development, homeowners in distress don't need any enemies. One does have to credit the ingenuity of the TBTF banks, however. It's as though they hired a bunch of former radicals, who spent their younger years thwarting various government agencies and private businesses, to figure out how to go after the people they once worked to help.
But this one isn't all that new. It's one of the strategies the banks have used for awhile in California to part people from their houses. And the bank negotiators did a good job--they simply didn't note that they often held second mortgages that they could write off, then claiming that they had modified a mortgage. I'd feel sorry for the government negotiators, but for the fact that I think they knew exactly what they were doing.
BTW, Neil Barofsky's book, Bailout, has a short and well-written analysis of HAMP, showing how it was designed to help the banks and screw homeowners in distress. HUD was involved in designing that one too.