How about this. Get the bank to refinance for the current amount of the loan. This is what they normally do only the value of the home is usually not underwater. What I do not understand is why a bank/servicer would fight this kind of refinance as the borrower is simply asking for a lower rate, based on the current rate, just as would normally happen under other circumstance. My son, for instance, just refinanced his house and had no problem as his value had not gone down very much.

Now, one more step. How about refinancing with fanny or freddy for the current amount of the home? I would think that if a home owner admits the debt, plans to pay it back, and simply wants to refinance, because of the lower current prevailing rates, should be able to do that.