When I enter my Mortgage Interest Credit Certificate (MCC), my federal refund increases by $2,000 despite the fact that I have no federal tax liability.

You are correct, the mortgage interest credit is non-refundable and should not increase your refund if you do not have any taxable income. Can you please verify that you have no taxable income by previewing your return:

1. Open or continue your return.
2. Select Tax Tools in the left menu (if you don't see this, select the menu icon in the upper-left corner).
3. With the Tax Tools menu open, you can then view your 1040 form: Select Tools. Next, select View Tax Summary in the pop-up, then Preview my 1040 in the left menu
4. Scroll down until you see Form 1040 Line 18. This should be your tax before any credits are applied. If there is an amount there, your Mortgage Interest Credit should be part of Line 20 and may be combined with other credits. You can see the Mortgage Interest Credit alone by scrolling down to Schedule 3 Line 6g.

I do have taxable income. But I thought this credit was just to reduce any amount I may owe, not increase my refund. Clearly I am not understanding something. 

It is hard to understand at times. 

IT IS TRUE that this is not a "refundable credit" which means if you owe $2 in tax, this two dollar credit would bring your tax to zero. 

If you owed $10, this two dollar credit would bring your tax due to $8

And if you owed $1, this $2 dollar credit would bring your tax to zero and that would be it.

Now let's say you owe $10, but you also get a "refundable credit", lets say the Child Tax Credit or Earned Income Tax Credit, and say the credit is $3,000. 

Your refund would show as 2,990. (the 3,000 credit minus the 10 you owe) 

NOW you enter this Mortgage Interest Credit worth $2. 

Now this 2 dollars goes towards the 10 you owe, so you only owe 8.

Now the 3,000 (refundable) credit is (3,000 credit minus the 8 you owe) and your refund is 2,992. 

The refund went up, because the tax you owe went down.