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Steve Gaulden has a good income, good credit and a nice house.

So when the Trinity resident took steps earlier this year to improve his family finances by locking in a stable mortgage payment, he could not have known that one of his banks would block his path.

The recession has ushered in “the new normal,” as financial experts say, causing lenders to act in abnormal ways.

Mortgage experts say some banks are refusing to refinance mortgages for some of their most reliable customers — customers with second mortgages or home equity loans — because they simply want borrowers to pay off loans and clear up shaky bank balance sheets.

Some reliable homeowners will find no relief despite their best efforts.

“Without a doubt, this threatens a new wave of people,” said Boston lawyer Joel G. Kinney , who was an adviser for the book “How to Sell Your Home in a Down Market.”

The nation’s top two mortgage lenders, Fannie Mae and Freddie Mac, have urged banks to be more flexible and support programs designed to restore the housing industry to full health.

But that’s just not the way banks see it.

“The more they can remove from their books, the more they can clean up their bank balance sheets, which are a nightmare these days,” said Chris Young, a Greensboro certified mortgage planner who owns The Young Team Inc.

Banks, meanwhile, have little to say to clients or the public about the issue. Banks say they consider each case individually based on credit history and other factors, but they often give little detail to customers whose requests they deny.

Young has seen a 40 percent decrease in refinancing approvals for people who should be able to refinance. Nationwide, that could mean tens of thousands of borrowers fighting the same problem.

Financially solid customers such as Gaulden are left scared and worried about what they’ve discovered.

Banks have money to lend, Kinney said, but they’re not responding to pressure from Congress.

At a hearing in Washington three weeks ago, the U.S. House Financial Services Subcommittee pressured a slate of bank executives to speed up their compliance with government-supported programs to help struggling homeowners.

Rep. Howard Coble, a Republican from Greensboro, is aware of this situation . Gaulden sent him a detailed e-mail about his difficulties. Coble’s office has done research on the issue, but the pressure can best come from finance committees that are overseeing the process, Coble’s spokesmen say.

Hundreds of thousands of borrowers across the nation financed houses through a combination of loans. Gaulden bought his $150,000 house five years ago with an adjustable-rate mortgage of $120,000 from Realty Mortgage Corp . He simultaneously took out a second mortgage of $30,000 with SunTrust so that he could finance 100 percent of the value of the home.

That would also help him avoid paying for mortgage insurance. His payment was good; he knew he could manage it for five years until he could refinance.

Buyers often use adjustable rate mortgages, or ARMs, to help them afford their first homes or to get by in times of financial stress.

These mortgages were sold aggressively by banks during the housing boom. They start with low fixed payments and interest rates for an early term, usually five to seven years. Most buyers expect to refinance to a loan with a permanent, or fixed, interest rate before the ARM ends and the rate adjusts, usually upward.

ARMs begin adjusting their interest rates and can rise to a much higher rate, usually pegged to the prime rate, London Interbank Offered Rate or treasury bills. If interest rates rise rapidly, such a loan could move from 6 percent interest to 10 percent, for example, after the adjustment period begins — boosting a monthly payment by hundreds of dollars.

Like many other stable home­owners, Gaulden, who is married with two children, doesn’t want to leave that threat open for when rates begin to rise.

Gaulden’s fixed-rate period expired in July.

“If it resets and that (payment) starts going through the roof?” Gaulden said. “Yeah, you’re talking about double or triple my house payment.”

Young, the mortgage planner, found Gaulden a way to refinance into a $120,000 fixed-rate mortgage with full approval from Fannie Mae. According to the new mortgage contract with Fannie Mae, all Gaulden had to do was to get SunTrust to agree under contract to go along with the new financing. Bankers call it “subordinating” a loan — the new mortgage would be paid off first under default. It’s usually a routine process.

That is, until SunTrust refused to make the change.

Instead, Gaulden, 37, would have to pay off the $30,000 loan or abandon his hope of refinancing.

He believes that SunTrust will be far more likely to get its $30,000 over the life of the loan if his financial structure is sound .

“It’s as if they’ve not only handcuffed you, they’ve handcuffed themselves to the track that the train’s coming down,” said Gaulden, a technical global adviser for NetApp.

Said Young: “You’ve got an entire group of people that are simply stuck, and they’re asking why?”

SunTrust spokesman Hugh Suhr said that the bank considers borrowers’ requests “on a case-by-case basis.”

Trey Hanna, 35, a single father of two in High Point, is struggling with issues similar to Gaulden’s.

Hanna, who works at Mickey Truck Bodies Inc. in High Point, financed his home with a five-year ARM, which is set to adjust in December.

He may actually see a reduction because interest rates are so low now. But in five years, if rates increase to normal or average levels, Hanna could be paying hundreds more a month.

Also like Gaulden, Hanna finds his plan blocked by SunTrust.

SunTrust is willing to give him a loan worth 90 percent of his $170,000 house — if he moves all his banking needs there.

Problem is, he needs more than that to cover his debt.

“I never thought in a million years this whole thing would happen like this,” he said.

SunTrust, which accepted $3.5 billion in government bailout money in November and has not made any repayments, is not helping its image, Hanna said.

“It’s SunTrust taking taxpayer and consumer money from the government and holding our mortgages hostage and not refinancing them or releasing them to other companies that want to refinance them, like Fannie Mae,” Hanna said. “It’s almost like government and SunTrust are not working together to solve this.”

Said Kinney, the Boston lawyer: “There’s a lot of people who aren’t in foreclosure right now and they won’t be in foreclosure if they can get out of these ARMs. And the banks are holding their feet to the fire. It’s the banks’ role to help. ”

Banks approach such situations in different ways.

BB&T says it generally subordinates second loans if the borrower’s main payment is reduced, improving the bank’s overall situation.

Wells Fargo, which bought Wachovia last year, said borrowers who modify loans under new government programs generally get second-loan subordination.

Charlotte-based Bank of America did not respond to questions or a request for an interview.

SunTrust, based in Atlanta, is affecting borrowers across the country.

“I’m seeing people here who are refinancing ARMs and finding their banks, especially SunTrust, are refusing to subordinate (home equity lines of credit),” Kinney said.

“This year is the first year I’ve had to tell clients, 'I don’t have a good answer for you.’ ”

His advice to beleaguered borrowers: “Be as creative as possible in finding a solution and finding another agency that can step in and help you or come up with creative financing.”

Young is pursuing just such an approach for his clients. He has spoken with SunTrust officials, Georgia banking officials and elected officials. He has found one glimmer of hope with a senior executive at SunTrust who believes that the bank’s divisions are confused about the bank’s policies.

She told him the bank should have been more flexible with his customers.

But he hasn’t seen any proof yet.

“I should know soon when I send a couple of applications through,” he said.

Hanna, meanwhile, received a letter from the Georgia Department of Banking and Finance recently promising that it will take care of his SunTrust loan problem. “We will see,” he said last week.

Kinney believes it may take legal intervention before more borrowers can regain power.

“The banks aren’t participating,” he said. “And there’s plenty of money out there, and there’s plenty of people that can fit in with the guidelines, and (the banks are) not doing it. A legal challenge needs to be brought.”

Contact Richard M. Barron at 373-7371 or richard.barron@news-record.com