propose to banks they forgive a portion of underwater mortgages and offer modified loans at current rates

Banks recoup only 40-60% of the real estate loans they foreclose on. Why not forgive a portion equal to the difference in the principle owed and the county tax appraised value and offer the mortgagors a revised loan with a new principle value at current interest rates in return for a pre-signed no-fault deed in lieu turn-over of the property if the loan goes 120 days delinquent. The banks lose 20-30% of their money instead of the current 40-60% and get a tax loss. Make the loan forgiveness exempt from IRS taxes.