I can’t provide a link because you have to log in with a password to get to the article. My buddy provided me with his password to access it.
You’re right, “someone is holding a bond backed by hard assets and they’re expecting a certain cashflow every month for it.” But at the moment they bought that bond they were explicity agreeing to the terms of the servicing agreement for the underlying collateral, which they could have read beforehand had they so desired. It’s called “due diligence.” (I know, I know… who has time to read silly legal documents when you’re busy jamming bonds.)
And, as the article suggests, it would appear that more than a few ABS servicing agreements allow for a some flexibility where modifications are concerned.
