Happy Memorial Day!

Dear Heavenly Father, with a sober heart we come before You this Memorial Day. We pause for a moment and call to mind all the men and women who have died in the service of our nation since 1776.

Dear God, please look with mercy on our brave and selfless brothers and sisters, who did not shirk from their task but gave themselves completely to the cause of defending and protecting us all. Bless all who have given their lives for the sake of liberty, and grant them eternal rest with You.

We remember also our brave men and women now serving in our Armed Forces, both at home and abroad. Dear God, send out Your angels to protect them all. Help them discharge their duties honorably and well. Please bring them safely home to their families and loved ones. Please bring Your peace and mercy to our troubled world.

We ask this, Father, in the name of Jesus, Your Son, our Savior and Lord. Amen.

By Father Loren Gonzales

JANUARY 2014 TO BRING MORE CHANGES FOR MORTGAGE LENDING RULES - SELF-EMPLOYEED BEWARE?

Unless you’re into reading the minutia of federal legislation, you are probably like most consumers and are unaware of a new mortgage lending rule that is slated to go into effect in January 2014. Born of the Dodd-Frank Wall Street Reform and Consumer Protection Act, lenders and consumers should anticipate the implementation of the “Ability-to-Repay” rule early next year, including its provisos related to qualified mortgage criteria. The new rule, like all other mortgage legislation of late, aims to protect borrowers and the real estate market from abuses and another housing collapse.

The idea behind the new rule is simple enough. In order to avoid abusive practices that harm consumers by obfuscating the true costs of a mortgage, the rule prohibits lenders from offering low or no-documentation loans that mask a mortgage’s true costs. Lenders will instead be required to ensure that borrowers can repay any mortgage offered to them – i.e., the “Ability-to-Repay”. Intuitive enough, right?

The “Ability-to-Repay” rule also defines a new loan category known as the “qualified mortgage”. These are a somewhat new financial beast designed explicitly to comply with the new repayment rule. The legislation requires that qualified mortgages adhere to the following criteria:

1. Qualified mortgages cannot have interest-only periods;
2. Qualified mortgages cannot have negative amortization;
3. Qualified mortgages cannot exceed 30 years;
4. Qualified mortgages cannot have balloon payments at the end of the term, with a limited exception for those living in a rural or underserving areas (although who defines that I’m not sure);
5. Qualified mortgages cannot exceed forty-three percent (43%) of a borrower’s monthly pretax income; and
6. Borrowers must provide proof of income or assets.

While these new rules may be good for consumers by stabilizing the housing market and minimizing the chances of a further collapse, the “Ability-to-Repay” rule is likely to have a chilling effect on at least one segment of the population – self-employed individuals. For better or worse, those who are self-employed often have uncertain, seasonal and/or fluctuating income. Under the best of circumstances in the current system, lenders are often hesitant to lend to these individuals. While more of a challenge to secure financing, lending for these individuals has, at least for the most part, traditionally been available.

So, what impact will these new rules likely have? The rules of the game are already stacked against the self-employed because of their often uncertain income. The “Ability-to-Repay” rule takes that burden and significantly heightens it by applying stringent criteria to get a qualified mortgage. Unless the applicant can demonstrate stable or increasing income, his or her chances of obtaining a mortgage may be poor. Under the new rules, it’s unclear whether and how much leeway lenders might have to make business decisions about making loans. As a matter of practicality though, I wouldn’t bank on lenders going out of their way to accommodate applicants who have anything other than a pristine record. It light of the present economic and political culture, I would wager that few if any institutions are willing to assume the risk of running afoul of the administration or this new legislation.

DOES YOUR "SOFT TISSUE" INJURY SATISFY NEW YORK'S SERIOUS INJURY THRESHOLD?

For those readers familiar with my articles, you might recall a previous piece in which I discussed New York State’s serious injury threshold law. In part, the article discussed how New York, years ago, implemented legislation intended to make it more difficult for individuals to maintain legal actions against negligent drivers unless they were “seriously” hurt as a result of the accident. This was done for a number of reasons, not the least of which included efforts to reduce state court dockets and the legislature succumbing to pressure from the insurance lobby. Propriety of the legislation aside, New York’s law, often referred to as the serious injury threshold law, achieves its aims by instituting certain criteria that must be met in order to maintain a legal action.

The legislature provides for seven different categories of injury that satisfy the threshold law:

1. Personal injury which results in death
2. Dismemberment; significant disfigurement
3. Fracture
4. Loss of a fetus
5. Permanent loss of use of a body organ, member, function or system
6. Permanent consequential limitation of use of a body organ or member; significant limitation of use of a body function or system
7. A medically determined injury or impairment of a non-permanent nature which prevents the injured person from performing substantially all of the material acts which constitute such person’s usual and customary daily activities for not less than ninety days during the one hundred eighty days immediately following the occurrence of the injury or impairment.

As even unfamiliar readers will note, there are some stark differences qualitatively speaking as far as how the law treats each category. Unlike the first four categories, which one either definitively suffers or doesn’t, the latter categories are more open to interpretation. In practice, categories 5 through 7 are the subject of ongoing legal debate and are continually changing.

While what qualifies as a serious injury under these categories is always fact dependent, they at other times appear subject to judicial whimsy. While the system isn’t always fair, leveling that accusation against the courts isn’t exactly fair either. The courts have undoubtedly left their mark on the law, but it and all of its intended or unintended ramifications are very much a creature of legislative design.

Let’s be frank, and I’ll offer an extreme example to demonstrate my point. There is a significant difference between a broken finger and a bulging disc in one’s back. Broken fingers, although perhaps uncomfortable while healing, rarely cause permanent problems once they’ve healed. That broken finger, however, will automatically qualify as a serious injury under the law, despite the fact that its impact is likely minimal. The same can’t be said for bulging discs and other soft tissue injuries, however. For anyone who’s ever suffered one, they can be utterly debilitating, cause regular pain and go unresolved for the balance of one’s lifetime. Despite that reality, unless certain factors are on your side, your soft tissue injuries may well not be compensable because they simply don’t rise to the level of a “serious injury” under the threshold law.

When I talk about soft-tissue injuries, I am basically talking about injuries that you suffer to your connective tissue, including muscles, tendons, ligaments and discs (the spongy, shock-absorbent tissue stuff between your vertebrae). These injuries can take the form of strains, sprains, tears and the like. Typical soft tissue injuries suffered in motor vehicle accidents are bulging discs and/or whiplash.

If you’ve suffered a soft-tissue injury in a MVA through the fault of another, you need to evaluate with an experienced attorney whether your situation rises to a level enabling you to maintain a legal action. There are numerous criteria that should be evaluated during this process, but here are a few of the more important ones to consider.

You first need to consider the nature of your injuries and how they’ve impacted your life. Many successful soft-tissue cases hinge on factors such as whether the injury required surgery or prevented you from working for an extended period of time. Hand in hand with those factors, one also needs to evaluate how the course of treatment progressed. Did the victim require an extensive and uninterrupted course of treatments since the accident, or were there gaps in treatment? The more of these factors you have on your side, the better your odds of surviving an inevitable motion by the defense to dismiss your case.

When it comes to soft-tissue injuries, another factor that plays into your likelihood of maintaining a successful case is your ability to produce objective medical evidence regarding the nature of your injuries and your accompanying limitations. It’s a rare occasion when I question a client’s reports of pain; who am I to say that they’re not feeling something other than what they claim. In the eyes of the court, however, that won’t be enough. Even the most horrific subjective reports of ongoing pain, when unaccompanied by objective medical evidence to substantiate those reports, are likely to get kicked by the court. For this reason, it’s imperative that you and your attorney learn all they can from your treating physicians about the true nature of your injuries and how they may or may not help you qualify under the threshold system.

There is no question that not all soft-tissue injuries meet the serious injury threshold, but under the right circumstances, one can meet those criteria. This has been one of the more chilling effects of the law. Is the threshold system fair? By no means would I even begin to suggest that, but it is the best we have and the one we are forced to work under. That said, if you’ve suffered an injury at the hands of a negligent driver, while your focus should be on healing, don’t forget to protect your legal interests. Soft tissue injuries can and often times do last a lifetime; while no-fault can often return you to your pre-accident baseline, sometimes it’s not enough. When that’s the case, don’t hesitate to explore your legal rights and options.