Am I missing something? Depreciting Expense calcu on Refinance

[Jason Poelma]

I set out to do a refi on my personal residence with a bank who would also give me a HELOC at more favorable CLTV than I can get from my normal lender. I just found out that they denied me for excessive DTI. When I asked about it they said that it was because I show a loss on both rental properties they wont count any rental income. I showed that the "loss" was wholly a result of depreciation expense and that I was actually cash flowing. They are a national bank and to be honest I have never used a national lender before. Is this normal? I can't wrap my head around this logic. Even with the loss how is there not an offset for rental income.