Mortgage flexibility rarer today
The same goes for all types of mortgages, not just subprime. Most mortgages are sold to an issuer, which packages loans into pools with hundreds or thousands of loans with similar terms, rates and credit quality. Each pool of loans is securitized, meaning that bonds backed by the loans are sold to investors. The investors don't own whole loans, they hold interests in the entire pool of loans.

When mortgages are securitized, they are chopped up and thoroughly mixed together. Modifying a loan in a securitized pool is like extracting a teaspoon of sugar from cupcake batter.

"Once the lender has sold the mortgage to the issuer, the lender no longer has the power to restructure the loan or make other accommodations for its borrower," Bair said. That power resides with the servicer, but "the servicer can only do what the securitization documents allow it to do."

Oftentimes, those contracts make it nearly impossible to modify more than 5 percent of the loans in the pool. Loans can't be modified until the borrower is at least a month past due. Tax laws and accounting rules restrict servicers' flexibility, too.

Some fear regulation's aftershock
George Miller, executive director of the American Securitization Forum, spoke of the "sanctity" of the contracts, and warned Congress that "policies designed to further regulate subprime lending or provide relief to borrowers" could cause investors "to shun the market altogether and cut off mortgage credit for worthy subprime borrowers."

A few witnesses talked about a two-week-old program of the Ohio Housing Finance Agency that will refinance mortgages for troubled borrowers. The agency will finance the these "opportunity loans" by selling taxable bonds. OHFA's director, Douglas Garver, said there are income and other restrictions on who can get the loans; they're starting out at 6.75 percent, which is very low for a fixed-rate, subprime mortgage.

During a break in the hearing, committee Chairman Barney Frank, D-Mass., expressed irritation when he was asked what sort of consensus will result from his series of hearings on mortgage problems.

"You guys keep asking me to spell out the answers," he said. But there will be more hearings and more questions and answers. "We're going to try to work something out," Frank said.

Crisis or not?
Jeb Hensarling, R-Texas, said he hasn't drawn any conclusions, either. "As a conservative, I tend to have a bias in favor of free people and free markets," he said. "Clearly, if you're losing a home, that's a crisis. In certain communities it may be a crisis, but if there's going to be some kind of Draconian congressional response, we ought to establish whether or not today we have a national crisis."

He added he's not convinced that "it's a crisis for the nation that isn't being addressed by the private marketplace."

The heads of Fannie Mae and Freddie Mac, which buy and securitize loans but don't underwrite mortgages directly, promised to expand programs to help homeowners refinance out of high-rate adjustable-rate mortgages and into fixed-rate loans. The changes won't be rolled out until later this year, and Fannie's program is for people who haven't had a late payment in the previous 12 months. That won't help borrowers who are facing imminent foreclosure.