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TH E M R EP O RT | 61 O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST GOVERNMENT Judge Dismisses Lawsuit Against HUD A judge dismisses a lawsuit against HUD regarding fair housing, and an industry group asks HUD to conform to a 2015 Supreme Court ruling on disparate impact. T he U.S. Department of Housing and Urban Development (HUD) an- nounced in August that it was moving forward on amend- ing the Affirmatively Further Fair Housing (AFFH) regulations. HUD said a court ruling had dismissed a lawsuit against the agency related to the department's decision to suspend the use of a computer tool to be used by local governments in meeting their fair- housing obligations to 'affirma - tively further fair housing.' In a 77-page ruling dismissing the lawsuit, Chief Judge Beryl A. Howell of the U.S. District Court for the District of Columbia said, "HUD acknowledges that the agency has not always adminis - tered programs in a manner to ensure that this long-standing stat- utory requirement affirmatively to further fair housing "(AFFH)" is met "as effective[ly] as had been envisioned." "I am tremendously gratified that the court agreed with HUD on all its legal arguments. My approach to regulations is that they should work in practice and not just in theory," Secretary Ben Carson said in a message to em - ployees on the ruling. "Whether it's making sure our regulations work in the real world or chal- lenging discrimination where we find it, HUD stands for fairness." Apart from the AFFH, HUD is also being asked to conform the Disparate Impact Rule to the Supreme Court decision. In a recent letter to the agency, the Credit Union National Association (CUNA) said the agency should issue a proposed rule to make necessary changes to its 2013 Disparate Impact Rule to conform to a 2015 U.S. Supreme Court ruling. "We urge HUD to thoroughly scrutinize the specific require - ments of the 2013 Disparate Impact Rule against the expansive lan- guage in Inclusive Communities to determine all changes necessary to bring parity between the rule and the ruling," CUNA said in its letter. "Following that review, it is critical that HUD works with credit unions and other interested stakeholders through both the formal NPRM process and direct outreach to the financial services community." Why Borrowers Are Still Sweet on HARP Close to 300,000 borrowers refinanced through HARP in the second quarter, and another 49,000 could benefit from the program, according to FHFA. R efis at Fannie Mae and Freddie Mac decreased in the second quarter, according to the quar- terly Refinance Report by the Federal Housing Finance Agency (FHFA). The FHFA reported that together, the government- sponsored enterprises completed 299,466 refinances in Q2, compared with 356,002 in the first quarter. Attributing the decrease in refi volumes in the second quarter to rising mortgage rates, the report indicated that total refinance volume decreased in June 2018 as mortgage rates rose in May, continuing a trend first observed in October 2017. "Mortgage rates decreased in June: the average interest rate on a 30-year fixed rate mortgage fell to 4.57 percent from 4.59 percent in May," the FHFA said. Of the total refinances, 2,973 loans were refinanced through the Home Affordable Refinance Program (HARP), bringing the total number of HARP refinances to more than 3 million since the inception of the program in 2009, the report indicated. Although the program is scheduled to expire on December 31, 2018, FHFA said 49,094 borrowers could still benefit financially from a HARP refinance. "These borrowers meet the basic HARP eligibility requirements and have a remaining balance of $50,000 or more on their mortgage, a remaining term on their loan of greater than 10 years, and a mortgage interest rate that is at least 1.5 percent higher than current market rates," FHFA said. "These borrowers could save an average of $2,290 an - nually by refinancing their mortgage through HARP." The report revealed that during Q2 32 percent of HARP refinances for underwater borrowers were for shorter-term 15- and 20-year mortgages. According to the FHFA, these mortgages build equity faster than the traditional 30-year loans. Regionally, the report found 10 states that accounted for more than 70 percent of borrowers who remained eligible for HARP and had financial incentive to refinance their loans. They included Illinois, New Jersey, Ohio, Florida, Michigan, Pennsylvania, Maryland, Alabama, Georgia, and New York. The report also indicated that borrowers who refinanced through this program had a lower delinquency rate com - pared with borrowers eligible for HARP who did not refinance through the program.