What if your company transfers you to another place, and you need to move, and you can't pay off the remainder of principal on the home with the (now lower) proceeds you get from the sale? Or even if you can, but you don't have enough for a down payment on a house in the new area?

Even regardless of that, I don't love the idea that a change in housing policy could make people feel trapped in their current home, unable to move. Granted, current housing policy (e.g. California Prop 13) has that effect on some people already. And I bet it sucks. Now, I'm not sure the government should be bailing out people who can continue to pay their (now underwater) mortgage but would just like the option to sell it and move. But I think this requires a bit more thought than just wielding that axe and letting things fall where the are. I mean, hopefully we're not advocating for more of the DOGE method.