While much of the focus on the Treasury's mortgage modification plan has focused on cram-downs, in which a judge alters mortgage terms, Business Week raises another issue. Four of the largest banks may have an incentive to modify loans that are currently performing as a way to jack up fees and servicing income.

The government plans, some have argued, would disrupt the traditional credit pecking order in which first lien takes precedent. "The government's plan could allow loans in a first-lien position to be modified, leaving loans in a second-lien position untouched." The fear is that the big banks, which own a lot of second liens and service a lot of loans, will modify loans to maximize revenue. No one is saying this will happen, just that it might. 

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