Go to a mortgage broker, and have them try you with a few different lenders.
I'd help you, but we don't lend in CA.
Faith Home Loans
skype: napleshomes http://www.andrewollick.com/realestateblog
I am self-employed and feel your pain!
Prudential CA Realty
I agreed with others that underwriting guidelines may vary from lender to lender. If you have been in business for more than two years and your business has been consistently making enough profits, your file should look reasonable to many lenders. If a lender denied your file because you had diverted some $$$ as W2, we would fight back if we were handling your file.
Of course, that lender might have denied your file for other reasons. Without looking at your actual numbers and tax returns, it is very to say. However, since lenders' guidelines are different, an experienced mortgage broker should be able to review your file and submit it to the most suitable lender.
National Brokers - connecting people to homes
This isn't a scam & you don't move forward with the program unless your own attorney / other financial advisers say it's good & to 'go for it'.
Regarding your troubles getting refinanced, I can offer the help of one of my loan brokers, see what he can do to stretch your salary / income explanation as far as possible, he's pretty creative.
Email me directly, I won't re-post on this same Trulia thread. I can give you a PDF doc explaining the benefit for your business & the info for my lender. Always good to get a 2nd opinion with lenders & shop around in your case.
Have you gone to your current lender and tried? Ask them if they can Streamline your loan? The requirements are not as stiff as trying to refinance thru another lender.
Being self employed has it's pros and cons and you've now seen one of the cons. They can't count profit since it is like commission, no one really know what it will be from year to year. Standards have gotten very tight in the last few years and it really does hurt the good people.
Since your loan is conventional and within Fannie Mae loan limits, we need to determine if Fannie or Freddie owns the mortgage. If they do, Fannie and Freddie each have a program that allows homeowners to qualify for a refinance based on your original loan application.
Don't give up hope. Call me Wednesday and I'll outline the process with you.
All The Best,