Federal Reserve Bank of New York  President William Dudley called on the U.S. government to try new programs to evive the housing market while saying the central bank may still consider ways to cut interest rates.

“I believe we should also develop a program for earned principal reduction for borrowers who are underwater but keep on making their mortgage payments,” Dudley said. “Such a program would strengthen the incentives for mortgage holders who are underwater to continue to stay current on their loans, and reduce the likely number of defaults” and real estate owned sales.

Here is a map showing levels of negative equity in America

From CoreLogic