Mortgage brokers say since rates plummeted this week, they have been swamped with calls from borrowers who want to refinance. But many of these calls don't have a happy ending.
Why? Because millions of borrowers can't refinance. Nearly one in four homeowners is underwater, meaning the borrower owes more on the mortgage than what the house is worth.
For these borrowers, the low rates and the inability to refi are like a slap in the face.
Meet Jeremy Sloane, a tax attorney in Orlando, Fla.
Sloane paid about $342,000 for his house in 2006 when he moved from Baltimore, Md., to Orlando, Fla., in 2006. He made a $25,000 down payment and took out two mortgages, one at about 6 percent and a second mortgage at 8.5 percent. His house is now worth about $150,000, he says.
He has three children and wishes he could sell the property and upgrade to a bigger home. But he can't. He tried to refinance his loans to lower his mortgage payments so he could afford to rent the house and buy a new one. But again -- he can't.
Despite his 800-plus credit score, stable income and never having missed a mortgage payment, his lender, as well as most other lenders, refuses to refinance his loans because he is underwater.
Nearly 11 million borrowers are in a similar situation, according to research firm CoreLogic.
Some argue the frustration these borrowers face may lead to more foreclosures as borrowers get fed up and walk away from their mortgages.
"They won't do anything unless you stop making your mortgage payments, which I'm not willing to do," Sloane says. "It's not the right thing to do and I don't want to hurt my credit."
Rob Nunziata, president of FBC Mortgage in Orlando, says he has dozens of clients who want to refinance but face the same obstacles as Sloane.
With mortgage rates at rock bottom, those who bought or refinanced during the housing boom -- when the rates were high -- could save a substantial amount of money if they refinance now. Rates are so low that most of the borrowers who got a mortgage more than four or six months ago could potentially benefit, Nunziata says.
"If these (underwater) borrowers could refinance it would help the economy in so many ways," he says. "But they can't."