Underwater Borrowers Can't Get Low Mortgage Rates By The Associated Press Posted 10:20AM 10/25/11 EconomyCommentsPrintText Size A A AEmail ThisWASHINGTON - Today's record-low mortgage rates are out ofreach for millions of U.S. homeowners who would benefit from them most.One in four homeowners with a mortgage - 11 million people - owe more thantheir home is worth. These "underwater" borrowers have virtually noshot at refinancing.Their plight is a drag on the housing market and the broader economy.The Obama administration is hoping at least 1 million of these borrowers willtake advantage of its refinancing program under more lenient rules unveiledMonday. Homeowners who are current on their payments will be eligible torefinance no matter how much their home's value has dropped.Still, it's unclear how many borrowers will benefit. Lenders will remain underno obligation to refinance a mortgage they hold.A growing number of these people are missing mortgage payments and falling intoforeclosure. And the higher rates they're locked into limit how much they cancontribute to a weak economy. If they were able to refinance at today's rates,it could boost consumer spending by tens of billions of dollars, economistssay.Underwater homeowners are paying an average 30-year fixed mortgage rate of 5.7percent, according to an analysis of mortgage data by CoreLogic and TheAssociated Press. That compares with today's average rate of 4.11 percent on a30-year fixed mortgage. For a homeowner with a $250,000 mortgage, the lowerrate would save more than $200 a month.For many Americans, a few hundred dollars each month would mean the differencebetween paying their mortgage on time and in full and losing, or walking awayfrom, their home.Underwater borrowers are the "most desperate population in the countrytoday," says Barry Bosworth, an economist at the Brookings Institution.Dan and Maggie Micoff bought a two-bedroom home in the Detroit suburb of MarineCity in 2003. They paid $119,000. Eight years later, they're underwater with a6 percent loan.If they could refinance, the Micoffs, both 58, could shave at least $120 fromtheir monthly bill."The banks won't work with us," Maggie Micoff said. "We helpedbail them out, and now we can't even get a personal loan to get by. We couldrent something for a few hundred dollars cheaper."Even among homeowners who do have equity in their homes, few are refinancing.Many have already refinanced within the past year. Others can't meet tighterlending standards. That's why underwater borrowers represent the best chancefor refinancing to unleash spending that's otherwise going toward mortgagebills.With millions locked into artificially high rates, foreclosures are rising.Mortgage default notices surged nationally last month.Whether the administration's revamped mortgage refinancing program will reachmore Americans this time is unclear, said Mark Vitner, senior U.S. economist atWells Fargo."No one knows if it will spur a lot more people to refinance, but it's astart," Vitner said.