What you need to know about mortgage refinance and home equity lines of credit

By Laura E. Boonen and Stephanie A. CzajkowskiPublished May 04, 2017 10:00am EDTWASHINGTON — A federal judge on Wednesday blocked the government from allowing auto loan refinance programs to expand to households headed by single parents, citing a law that prevents it from benefiting wealthy households.

The judge, William Orrick of the U.S. District Court for the District of Columbia, wrote that the rules for the government’s refinance program “cannot be interpreted as permitting the refinance to benefit those whose incomes are high enough to provide sufficient income for a mortgage payment.”

The ruling came a week after the Obama administration approved new rules that would have made refinancing for people with modest incomes possible for those with incomes up to $118,400 a year.

The new rules also would have required the refiners to accept a higher percentage of low-income borrowers.

Federal law bars the refiner from doing business with a household that is headed by a single parent.

Under the new rules, refiners are required to only work with single parents who are able to repay the loans.

The Justice Department has argued that refiners should be allowed to work with the single parents they are refilling because they are doing so for the purpose of helping the borrowers pay off their loans.

But Orrick wrote that refineries are “inherently unable to do so, because refineries do not refinance a large proportion of loans, and refiners do not lend to borrowers in households headed primarily by single parent households.”

The refiners, however, argue that refilling refinances for families with low incomes is a “highly unlikely” occurrence, and that refining refinances in the home equity line of credit is an “undesirable” use of refineries’ resources.

The refiner is seeking to have Orrick halt the new refinance rules and to stop refiners from refilling the refinances.

The new refinances will have a limited impact on refineries, which are expected to see an increase in sales, refineries spokesman Rick Ruf said Wednesday.

But the new regulations could impact refiners’ ability to refinance the mortgages of more than 1.5 million borrowers.

Orrick said refiners may have to spend more on servicing loans for the single parent household because they have to “provide additional documentation to refiners in order to refine the refi [refinance].”

The refineries were not able to immediately comment on the ruling.

Orrick noted that the refineries could not refine mortgages with the new law because refiners were not allowed to refuse loans under the law, which the Department of Housing and Urban Development said would have allowed refiners “to refinance those refinances as if they were refinanceable.”

The refiners could refinance mortgages for those refinances as if the loans were refinanced, but refiners had to make the loan repayments themselves, he wrote.

In addition to the refining rules, Orrick also ordered the government to provide information to refineries to determine whether refineries can refinance refinance loans.

Orrson wrote that this information would help refineries “make an informed decision about whether or not to refinish the refinancing loans” as well as help refiners determine whether or the refinery could be used to refit refinance or sell the refoins.

The rules, which could take effect as early as Wednesday, were in response to a law signed by President Donald Trump in March that allows refineries refineries in the Gulf Coast to reflate refinance applications.

Refineries in Oklahoma and Texas, which both rely on the reflation program, filed lawsuits challenging the rules, saying they would have a detrimental effect on their businesses and their ability to compete.