Since you are anyhow moving towards a clean slate, try a very low fixed mortgage rate.
To have a chance to transition to the future without incurring in new public debt that will make the future unbearable substantial real haircuts have to be made in the rest of the economy and the faster and deeper the better since that leaves more room for the ok it hurt but now at least it is over feeling that is a prerequisite for all belief in a better future.
What would I do? With respect to the mortgages I would analyze the possibility of imposing by decree a very low fix interest rate on all outstanding mortgages in the US; and this because I believe that in that unfair and unsustainable idea that you could finance anything to anyone as long as the high rates that some were willing to pay were enough to compensate the losses of those not capable of repaying, lies much of the original cause for this crisis.
The above would give millions of lousy mortgages more chance of being duly serviced and perhaps even make the market value of these mortgages higher than what their current impossible-to-pay value are. In order to compensate those younger generations that have no houses, the same kind of financial facilities should be extended to anyone buying a repossessed house, at 70% of its previous price and that makes a 15% down payment. Just? No! But there is also little justice in public debt forgiveness.