Loan Scenario Upside down house - help

[broker44]

Here are the facts:

Home now appraises for 125K
Customer owes $149K
Current loan is an ARM that adjusts this month, currently it is at 10.25%
Client has never missed a mortgage payment and the servicer said to do a remod they need them to be 60 days down.
They won't take a short payoff because there is no reason to.
I have the customer approved 30F Fha at 97% of the 125K so when all is said and done to close they are short $28,000.
The new mortgage will save them $409 a month.
Of course the client is not thrilled with the idea of having to come up with 28K.

Is there anything that I am missing that I can offer to this borrower?
What would you recommend in this situation?

Thanks