Create a loan guarantee program to refinance underwater mortgages whether or not they are owned by GSEs.

There are currently over 10M mortgages that are higher than the value of the homes financed by them. Homeowners are unable to refinance these mortgages to take advantage of the current low interest rates, which are available due to Government policies, or sell the property without damaging their credit. This locks up spending power of the middle class and stops labor mobility.
The Federal Government, though the VA, FHA and other existing organizations, should guarantee new low interest loans that include moving the amount between 80% of the assessed value and the total owed to a loan that is not attached to the property. The homeowner would not only have a lower rate, but would be able to sell the property in the current market. The homeowner would still be liable for the full principle