Upside down mortgage refinancing

i have a 80/20 mortgage. the original total amount financed was 160,000. the first balance is 119,000 at 6.5% - 30 year fixed with 25 years remaining. the second is 30,000 @8.6% and is a 15 year ballon with 10 years remaining. i applied for refinancing, but because of the foreclosures etc. the appraisal was on $134,000. therefore, i am upside down with $15,000 negative equity. the refinance company called to say that the could refinance the 119,000 at 4.85%, but could do nothing about the $30,000 because the loan is upside down. the figure they give as cost of refinancing was over $9,000. am i right in believing that it does not make sense, as i would be adding 5 years to the loan, plus an additional $9,000? is there any other solution? my payment history is good, but my credit score is only 675. i need your expert advice. thanks.