HUD came out with 2 new mortgagee letters on August 6, 2010 pertaining to the FHA refinance for borrowers with negative equity. There is no telling when the banks will implement this or how many they will actually help since we saw a similar program about a year a half ago that was called the Hope for Homeowners. This was to be a refinance based on 90% of the current appraised value with equity sharing. The last statistic I saw showed it helped 357 borrowers.
“On March 26, 2010, the Department of Housing and Urban Development (HUD) and the Department of the Treasury (Treasury) announced enhancements to the existing Making Home Affordable Program (MHA) and Federal Housing Administration (FHA) refinance program that will give a greater number of responsible borrowers an opportunity to remain in their homes. These enhancements are designed to maintain homeownership by providing borrowers, who owe more on their mortgage than the value of their home, opportunities to refinance into an affordable FHA loan. This opportunity allows borrowers who are current on their mortgage to qualify for an FHA refinance loan provided that the lender or investor writes off the unpaid principal balance of the original first lien mortgage by at least 10 percent.”
Here is the link to access the eligibility requirements http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/10-23ml.pdf
Here is the link for the combined loan to values pertaining to secondary financing http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/10-24ml.pdf
Located in South Florida, Justin Miller has established himself as a leader in the mortgage community for his expert advice and understanding of the current real estate climate. 
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Thanks for the feedback Mike!
This sounds like a great program for someone like me but my lending institution notes that participation is voluntary for them. When you have a program that requires the lending institution to write off at least 10% of the principle and then make it voluntary, what lending institution is going to go for that?