Question for r/finance about the banks, mortgages and the housing market. [Possible Solution??](xpost from r/economics)

Now that it appears home values/prices are once again starting to take a nose dive. One thing that has perplexed me is why don't these banks or lender's sitting on these mortgage portfolio's (where some portfolio's 80% of mortgages are upside down) just say "We are going to write off or write down 50% of the loan amount that is upside down for all of our homeowners". For example, if someone bought a house when it was appraised at $300,000 - put a down payment of $30,000 and got a loan for $270,000 and now the house is appraised at $175,000 means that the homeowner is now upside down by $95k. If the bank said we'll write off 50% of that $95,000 that would mean a $47,500 reduction in the loan for the homeowner but at the same time the bank would have a $47,500 loss.

There are some immediate benefits I see for the bank and for the homeowner if this was to happen:

1. The homeowner gets a much needed break.
2. The homeowner gets a lower monthly payment.
3. Homeowner becomes more loyal to the bank and bank builds goodwill
4. The bank keeps getting a monthly payment on the loan
5. Home values in the area stabilize/recover since that home doesn't get foreclosed upon thereby helping the bank and other homeowners indirectly.
6. Possibly reduces the banks exposure/liability to bad loans by reducing the loan amounts.
7. As a result, more capital would be freed up at the bank to pursue other projects/lending.

I understand that the shareholders of the banks would not be happy with this type of program but at the same time - we the American people bailed out these very banks in 2008 (and consequently the shareholders) by providing them with over $700billion in taxpayers dollars. So now I think its time that Wall St step up to the plate and give the American people a much needed break.

Thoughts/suggestions/critiques?

PS. If banks have done this very thing (writing off 50% of the loan that is upside down), then why isn't the program more well known and why hasn't it helped the housing market recover?