Housing Woes

My sister and her husband have been talking to tons of mortgage lenders over the past several months. They just bought a house last September and their mortgage was written so oddly that they've been working to refinance it ever since. Sadly, with the housing market the way it is, no one is getting loans. They have $50,000 down and still can't get a loan for $200,000! What in the world? Even if they didn't have perfect credit, the down payment alone should give any lender some confidence!