No way to refinance... really?

[Bob C.]

My girlfriend really needs to refinance her house/residence.  She's paying a staggering 6.25%.  

1) Her income has dropped to about 1/2 of what it was when she made the orig mortgage

2) The loan-to-value is very close (Balance of mortgage: $207k,  House value: $235k) About 11% Equity

3) She's not missed any payments

I know there are government backed refinance programs out there that would help, but her bank says she doesn't qualify.  They say that her loan is non-complying because the mortgage is a portfolio loan and there is not enough equity for a conventional loan.

Are they blowing smoke to keep that 6.25% note, or is there an option for her somewhere? 

Thanks!