Greg is correct. FHA Secure (one of the bail out programs passed by Congress) has been expanded to allow a 2nd lien to be subordinated (which means it stays in place while the first lien is refinanced).
You could use an FHA insured loan to 95% of present market value, use it to cover the payoff on your first lien, closing costs, and a portion of your second lien. The reminaing balance on the second lien would be re-subordinated behind the new FHA insured first lien, and your combined Loan-to-Value ration could exceed 100% of your home's appraised value.
However, there are some problems:
1.) While FHA does in fact insure loans with CLTVs over 100%, very few if any lenders are willing to write those loans. Lenders are free to impose their own guidelines on top of FHA guidelines as the lender is responsible to FHA for the quality of the underwriting as well as performance of FHA insured loans. Very few lenders are willing to take on the additional risk of writing FHA Secure products.
2.) You must qualify for an FHA insured loan. FHA guidelines on qualifying income ratios are much more stringent than conventional loans, and judging from the rates you quoted from a 2005 origination, it sounds like your loan was originated with a subprime (and probably now defunct) lender. Back then, qualifying debt-to-income ratios were as high as 55%. FHA's maximum is 43% or higher if there are strong compensating factors such as liquid reserves.
What to do:
1.) Call your bank and ask if they have DE FHA Underwriters (these folks specialize in FHA underwriting and have more approval authority than non FHA DElegated underwriters). Then ask if they write FHA Secure. If answer is yes, go see the bank's mortgage sales rep.
2.) If the answer is no, hire a mortgage broker. You should interview several. First question to ask: Are you FHA approved? If not don't waste your time. Second question to ask: How many FHA Secure loans have you written? If the answer is "None" or "What is FHA Secure?", don't waste your time.
FHA Secure may be your best bet, but it will take some legwork on your end to find a comptent professional who knows the program and has the ability to underwrite and fund FHA Secure loans.
Even then you may not fit the program's guidelines. But first you have to find the mortgage professional who can give you the correct answer.