FHA loans, as of 1/09, provide for non-cashout refinances loans up to 97.75% of appraised value (not counting Up Front Mortgage Insurance Premium and any Energy Efficient Mortgage, which can effectively take you above this amount). If you have had no additional equity draws on the 2nd within the last 12 months, FHA will allow the 1st/2nd to be a rate & term refi into a single loan.
Real question: your current equity.
If you want to shoot me your address (offline via email) I can run a Comparative Market Analysis (CMA) to see where you might be value wise to see if this is an option.
Unfortunately, in many cases there simply is not enough equity in the home to refinance.