Hawaii homeowners with good credit and plenty of equity in their homes are waiting months to get refinancing loans approved — if they’re approved at all — and the delays are chasing hundreds of mortgage brokers out of the island market.

To take advantage of low interest rates that are forecast to continue falling, Hawaii homeowners have to write letters explaining expenditures that are years old, challenge property appraisals and provide bank statements and other documentation that was unheard of two years ago.

Loans that once took a couple of weeks to get approved now drag out for months, which makes it far less appealing for mortgage brokers, who find themselves struggling to shepherd loans through, said Scott Coffman, president and education chairman of the Hawaii Association of Mortgage Brokers Officers.

He estimates that the number of Hawaii mortgage brokers has dropped to only 1,200 today from about 8,000 two years ago.

"With all of the man-hours they now spend on each loan, it’s just not worth it because they only get paid when the loan closes," Coffman said. "And for the homeowners, by the time they get to the finish line they are tired and are saying, ‘I’ve never been through anything like this before. I can’t believe all the things I’m being asked for.’"

The experience of Hawaii homeowners hoping to refinance at more favorable interest rates mirrors the picture across the country as the U.S. economy continues to recover.

The stricter lending market in Hawaii and across the mainland is blamed in part on the no-money-down, subprime mortgage loans that undercut the housing market. That prompted new regulations that make it harder for homeowners — even those with good credit — to qualify for refinancing loans.

"In 2008, anybody could get a loan with poor credit and low credit scores," Coffman said. "Today it’s completely opposite. A lot of people cannot get loans at any price and even the best borrowers are surprised. If you can survive the razor-blade lines and jump through the flaming hoops without getting cut or burned, you get a loan."

Interest rates on 30-year fixed loans were averaging 4.27 percent across the country last week, which was an all-time low for Freddie Mac’s record keeping. For the same period last year, interest rates on 30-year fixed loans were running at 4.87 percent, Freddie Mac said.

No one in Hawaii tracks the number of people applying for refinancing loans, how many are approved or how long the process takes.

Title Guaranty Escrow Services Inc. does include refinancing loans in its monthly "mortgage barometer" that lumps together all forms of mortgages, including home equity lines of credit.

Title Guaranty Escrow Services found that the number of loan approvals jumped to 46,999 last year from 44,745 in 2008.

By the end of August, 22,124 mortgages had been approved for 2010.

"We see the ‘refi’ market continuing to increase through the end of the year and we predict interest rates will go down further," said David Pietsch Jr., president of Title Guaranty Escrow Services.

Lenders have more than doubled the period that homeowners can lock in their interest rates, which coincides with the increased time it take to get a refinancing loan approved, Pietsch said.

"No. 1, it’s because of the volume of loan applications," he said. "No. 2 is the government checklist they have to go through to ensure compliance. Every month HUD (the U.S. Department of Housing and Urban Development) is redefining and reclarifying some of their points."

The toll on homeowners cannot be measured in any Hawaii statistics. And there is no record of how many people simply give up trying to get their loans approved.

"You’re only talking about the people that succeeded, not those that tried and never got to the finish line," Coffman said.

Last month, Steve and Laura Adams finally crossed that magical finish line to refinance their custom-built home along Kamehame Ridge in Hawaii Kai after months of frustration.

"Was it worth all of the aggravation and pain and suffering?" Steve Adams said. "Probably."

Asked what advice he would give to other Hawaii homeowners thinking of immersing themselves in the refinancing process, Adams paused. "Prepare yourself," he said. "The end result will be worth it. But there’s going to be some pain and suffering along the way."

In July, the Adamses began the process to refinance their three-bedroom, 2 1/2 bathroom, million-dollar-plus home. The plan was to lower their interest rate to 4.375 percent from 5.375 percent and cut their monthly mortgage by $500.

"It was an opportunity that I couldn’t pass up," Adams said.

With a credit score in the 800s, no credit card debt and $600,000 worth of equity, "I thought it should have taken 30 days," Adams said. "It was much longer."

The Adamses had to provide their income tax returns for the first time in their lending history, come up with months of bank statements and prove that they paid off their credit cards every month "even though I’ve been doing that for the last 20 years," Steve Adams said.

Their annual homeowners’ insurance policy isn’t due until the end of October. But in mid-September, the day before the loan was to be recorded, their mortgage broker hastily called and said they had to pay the entire year’s policy that morning.

"They said I needed to pay it by 11 a.m. even though it wasn’t due for another month and even though I’ve been paying it this way for 15 years," Adams said. "It was 9:30 in the morning and I had to leave my office to make sure it got paid. My wife teaches kindergarten and there’s no way she could have done it right away."

Adams’ mortgage broker also called to verify his employment, which was also a first. And Adams had to write a letter explaining his income stream and all of his business expenses.

Then the Adams’ appraisal on their property came in at $200,000 less than its assessed value. He challenged the appraisal.

"For some people, the amount of documentation they’re requiring is necessary," Adams said. "Those no-document, zero-down loans never should have happened. But when you have someone with solid financials who has never missed a mortgage payment, my god. Talk about having to jump through hoops."