Why can't the government work more like private investors?

As the housing market has softened considerably, with millions of home in foreclosure over the past year, the federal government has not done more than raise the limits on Jumbo loans and encouraged the private sector to renegotiate loans before they move into default.

 As more and more homes hit the danger zone, private investors have been negotiating the loans for pennies on the dollar with private banks that don't want the foreclosed loans on their books.  The negotiate lower balances, lower interest rates, and more favorable monthly terms.  Then, they resell the loans to new investors or renegotiate payment plans with the original owners, who no-doubt needed the help.  The million dollar question: why can't the federal government renegotiate these loans so that the American people, rather than wily investors can make a profit and protect homeowners at the same time?