A federal government agency has issued new rules for home mortgages that will rewrite the way that banks decide who gets a home loan. If you’re thinking about buying a new home, you’ll want to know about these rules, so you’ll know what to expect when you apply for a mortgage and what you can do to increase your chances of getting the loan you want.
The rules officially take effect next January, but many lenders will begin following them as soon as possible.
For a long time, banks have been worried about being sued by homeowners if they make a loan that the homeowner can’t reasonably be expected to pay off. The new rules say that banks can no longer be sued in this way if they make loans that follow certain requirements. These loans are called “qualified” mortgages.
While it’s possible that some lenders will continue to issue “unqualified” mortgages, this will be the exception rather than the rule, because lenders will be facing potential legal liability if they do so. It’s expected that most lenders will try to issue only qualified mortgages.
So, what is a qualified mortgage, and how do you qualify to get one?
The most basic new rule is that a mortgage is “qualified” only if your total debt payments – including not just the mortgage, but also car loans, educational loans, etc. – are no more than 43% of your pre-tax income.
In addition, lenders are required to carefully scrutinize your employment status, income, and credit history to verify that you’ll be likely to be able to repay the loan.
That’s a pretty strict rule. To put it in perspective, of all the mortgage loans that were issued in the U.S. in 2011, only about three-quarters would have been “qualified” under these rules.
However, because today’s real estate market is still in recovery mode, the Consumer Financial Protection Bureau – the agency that issued the rules – is providing a temporary alternative.
That is, even if you don’t qualify under the 43% test, you might still qualify if you would pass an automated mortgage-granting test used by Fannie Mae, Freddie Mac, or the Federal Housing Administration. It appears that most of the mortgages issued in 2011 that didn’t pass the 43% test (but by no means all of them) would still have qualified under one of the automated tests.
This alternative won’t be around for long; it lasts only until the government’s conservatorship of Fannie and Freddie ends, or in seven years, whichever comes first.
Also, the alternative test can’t be used if you apply for a so-called “jumbo” mortgage. These are mortgages that are larger than the government’s loan ceilings, which are $417,000 in most of the country (but can be as high as $729,750 in certain high-cost markets).
Here are some other important provisions of the new rules:
Ex-wife loses alimony because of hiding assets
When marriages get unhappy and divorce is on the horizon, there can be a real temptation to hide assets to keep them from the other spouse. But tempting as this may be, it’s morally wrong, and it can also get you into legal trouble.
Take the case of a New Jersey woman who took $350,000 from the business she owned jointly with her husband and secreted it away. Clever as she was, during divorce proceedings a forensic accountant discovered the secret stash.
The woman thought she’d be okay in the end, since the divorce judge simply ordered her to repay half the amount, and proceeded to award her $600 a week in alimony.
But husband appealed, arguing that the woman’s actions were so terrible that she should be disqualified from receiving alimony payments.
An appeals court agreed with the husband. In general, it said, the right to alimony isn’t affected by who was at fault for the marital breakdown. But this was a rare case where a spouse “kicked” the couple’s economic security “in the teeth” through embezzlement, and the fault was so blatant that the woman shouldn’t be allowed to get away with it
Medicare expands its coverage for people with chronic conditions
In a major change, the federal government has agreed to provide seniors who have chronic illnesses and disabilities with Medicare coverage for many services … even if those services will simply maintain the person’s present health status and aren’t likely to improve their condition.
This is very important news for people who have diabetes, heart disease, Alzheimer’s disease, multiple sclerosis, Parkinson’s disease, Lou Gehrig’s disease, arthritis, or the effects of a stroke, among other medical conditions.
Soon, these seniors may be able to obtain Medicare coverage for care in a skilled nursing facility, as well as home health care and outpatient therapy.
For decades, Medicare had a “rule of thumb” that coverage for these services was available only if they were likely to lead to an improvement in the patient’s condition. This resulted in many people with chronic illnesses being unable to obtain coverage for treatments that were critical to maintaining their health, but that didn’t promise a cure or improvement.
According to the government, treatments that weren’t likely to lead to improvement were considered “custodial care,” which Medicare doesn’t cover.
But in January 2011, a group of seniors and some elder advocacy groups brought a nationwide class action lawsuit against the government. They argued that this policy violated their rights, because the “rule of thumb” against covering such services never actually appeared anywhere in the Medicare laws.
The government tried to have the case thrown out, but a federal judge rejected that request and allowed it to proceed. Shortly afterward, the government agreed to settle the case by expanding Medicare coverage.
The settlement is being reviewed by the court, and it’s still unclear exactly when the policy change will go into effect. It’s also unclear whether the change will apply just to future claims or to claims going all the way back to January 2011.
Under the terms of the settlement, seniors who are enrolled in Medicare Part A, which covers hospitalizations, may be eligible for up to 100 days in a skilled nursing facility (as long as it follows a three-day hospitalization), as well as up to 100 home visits following a hospitalization. Seniors who are enrolled in Part B, which covers doctor visits and other outpatient services, may be eligible for potentially unlimited home visits.
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In Massachusetts, along with most other states, there are two types of child custody: 1) legal custody; 2) physical custody. Not all parents understand the difference between the two types of custody, and it can sometimes be confusing.
When a parent has legal custody of a child, then the parent has the right to make important and major decisions in the child’s life. This includes where the child will go to school, decisions about the child’s health and welfare, what religion(s) the child will be raised in, as well as other significant decisions affecting the child. Typically, but not always, both parents share legal custody, which then is known as joint legal custody. However, in certain instances, only one parent has legal custody, which is known as sole legal custody.
The other type of custody is physical custody. This type of custody relates to who the child physically resides with. If a child resides with one parent more than the other parent, then the parent who has the child more of the time has primary physical custody. If parents equally share time with the child, then there is no primary physical custodian, but rather joint or shared physical custody.
A custody arrangement is typically created either by agreement of the parents or by order of the court. The legal standard for developing a custody arrangement is the best interests of the child. Through the legal standard, the courts analyze how a child’s living arrangements and upbringing affect their physical, mental, and emotional well-being, and based upon that, what is best for the child. Oftentimes, the determination is very case and fact-specific, and there is not one “clear cut” answer to any case.
Divorces can be a lengthy, complicated and emotionally charged process. With all of the procedural nuances of a divorce proceeding and procedural rules of the court, even after several court appearances, it is entirely possible that a spouse will not have had the opportunity to testify and tell his or her side of the story. Oftentimes, the first few court appearances just involve the parties’ attorneys arguing on their respective behalves and a judge making a ruling. It is not until much further into the process that a spouse has an opportunity to speak on own their behalf and tell their side of the story.
A recent study showed that brides and grooms-to-be who have cold feet before their wedding could very well foreshadow an unhappy marriage that could even end in divorce.
Brides and grooms-to-be who have cold feet should really consider entering into a prenuptial agreement with their future spouse. This agreement can protect both spouses-to-be in the event that the marriage does not work out and end in a divorce.
Contrary to popular belief, a prenuptial agreement does not protect just one spouse; it protects both spouses. It must be fair and reasonable for both parties. It can be a very specific agreement dealing with all aspects that may be covered in a potential divorce, including distribution of property and assets, alimony, child support, and child custody. Or, the agreement can be narrow, and just address one or two issues, like protecting a specific property owned by one spouse-to-be.
A prenuptial agreement also requires both spouses-to-be to make a full and accurate disclosure of their assets and liabilities. This way neither spouse enters the marriage with any financial secrets.
A prenuptial agreement can be a good idea to protect spouses who are concerned about any potential risk of divorce in the future.
Source: www.theglobeandmail.com , "Wedding day cold fee? Divorce may be in the cards"Wency Leungr, Nov. 8, 2012.
Holidays can be an exciting time for families. They can include family gatherings, big meals, and other fun events. But they can also be a stressful time for parents and children when negotiating a visitation schedule or co-parenting plan resulting from a divorce. This can mean maintaining different schedules and children splitting their time between their mother’s family and their father’s family. This can lead to stress and aggravation for not only the parents, but for the children as well.
There are, however, ways to prevent this. When negotiating a parenting plan or visitation scheduling in the midst of a divorce, parents should consider not just the regular weekly visitation schedule or parenting plan, but holidays as well. When drafting a visitation schedule or parenting plan, the parents should consider what traditions, events, and functions, both the mother’s family and the father’s family have, and try to develop a visitation schedule or parenting plan that accommodates all of these factors, and allows the children to see both sides of their family and celebrate each holiday.
It’s important to plan for all holidays. So in addition to planning for the major holidays, such as Thanksgiving, Hanukkah, Christmas, New Years, and Easter, parents should think about the smaller, or shorter holidays, such as Memorial Day, Fourth of July, Columbus Day, Veterans Day, and other “one day” holidays. Parents should also remember to plan for extended school breaks, such as winter vacation and summer vacation.
By placing a parenting plan or visitation schedule in your Separation Agreement that includes holidays, it provides some structure and predictability for everyone involved. That way parents can plan special functions or outings for each holiday. This also makes each holiday less stressful for the children, because the children will know in advance with whom they will spend their holiday. When a holiday involves extended family, it also helps the extended family plan any special functions and know whether to include the children in the planning.
Each family is different and plans for these holidays in different ways. What is most important when drafting a parenting plan or visitation schedule is to make sure it works for your family, including you, your former spouse, your children, and also your extended family. Think about what your family usually does for each holiday. Consider any traditions or special functions you and your family may attend for each holiday. That way you will have a parenting plan or visitation schedule that suits your family’s needs.
Under the new Massachusetts Alimony Reform Act, which became effective in March 2012, if a spouse who receives alimony begins to cohabitate with another person, then alimony may be modified or terminated under the new law. This is a departure from the previous Massachusetts alimony law, which did not allow for termination or modification based upon cohabitation.
In cases involving General term alimony, a payor spouse shall modify or terminate his or her alimony obligation if the recipient spouse has been cohabitating with another person for a continuous period of at least 3 months. Cohabitation is defined as persons who maintain a common household when they share a primary residence together with or without others.
It must be noted, however, that the payor spouse has the burden of proving that the recipient spouse is cohabitating with another person. To prove this, the payor spouse may show any of the following:
In March 2012, the Massachusetts Alimony Reform Act became effective. Under the Alimony Reform Act, a spouse’s alimony obligation now has a termination date, whereas under previously Massachusetts alimony law, a spouse’s alimony obligation could last forever.
To determine when your alimony obligation will terminate, you first must know what kind of alimony you are paying. There are four categories of alimony in Massachusetts: General Alimony, Rehabilitative Alimony, Reimbursement Alimony, and Transitional Alimony.
General Alimony is the most common type of alimony. Under this type of alimony, a spouse’s alimony obligation lasts for a percentage of the length of the marriage.
In addition to the durational limits set on General Alimony, a spouse’s alimony obligation also will terminate upon the death of the payor spouse, the death of the recipient spouse, remarriage of the recipient spouse, or retirement of the payor spouse. General Alimony may also terminate if the recipient spouse has been cohabitating with another person for 3 months or more.
Rehabilitative alimony cannot last more than 5 years, and shall terminate upon the death of the payor spouse, death of the recipient spouse, remarriage of the recipient spouse, or a specific date or event as defined and ordered by the court.
Reimbursement alimony terminates upon death of the recipient spouse or a date certain as determined by the parties or by the Court.
Transitional alimony may not last for more than 3 years from the date of the divorce. It also terminates upon the death of the recipient spouse or a date certain as determined by the parties or the Court.
Under Massachusetts law, parents who are divorced or separated must continue to support their children. In Massachusetts, a parent’s child support obligation is calculated based upon the Child Support Guidelines. The Child Support Guidelines are a set of rules that dictate how to calculate a parent’s child support obligation, and what income must be included in the calculation of child support.
The Child Support Guidelines often compare the respective financial circumstances of each parent and also look at the standard of living the child(ren) enjoyed while the parents were still married. In calculating child support, the court considers all sources of income, including salaries, wages, overtime, bonus, income from self-employment, commissions, interest and dividends, disability benefits, social security benefits, unemployment benefits, and many other sources. The court may even impute income to a parent, if the court believes that the parent is not working or earning income to his or her fullest ability.
A parent’s child support obligation is calculated by adding the combined gross incomes of the recipient parent and the payor parent, less any child care, health insurance, dental and vision insurance, and other child support obligations already paid. This combined gross income is then multiplied by a factor based upon the number of children in the family. The product of the parents’ gross income multiplied by the pre-determined factor based upon the number of children in the family is the combined child support obligation of the parents. Each parent’s child support obligation is then factored on a pro-rata share based upon their gross incomes.
Even in cases where a payor parent has no income, they can be ordered to pay a state-mandated minimum order of $80.00 per month (or $18.46 per week). In cases where the parents’ combined income exceeds $250,000.00, the court is not obligated to order a child support obligation above the first $250,000.00, but has the discretion to do so.
In cases in which the child(ren) are residing with both parents, then the child support guidelines must be run with as if each parent was the payor parent, and the parent with the larger obligation must pay the difference in the two Child Support Guidelines amounts.
By statute, a parent’s child support obligation continues through until a child is at least 18 years old. However, a parent’s child support obligation can continue up until the child attains the age of 23, if the child is still predominantly dependent upon the custodial parent and is enrolled full-time in college.
A parent’s child support obligation can be modified every 3 years, or upon a showing of a material and substantial change of circumstances. A child support obligation may be modified by filing a Complaint for Modification with the court.
In 2011, the Massachusetts Legislature passed the Alimony Reform Act, which completed overhauled the alimony laws in Massachusetts. When the Act became effective in March 2012, alimony then became categorized into four different types of alimony.
The first, and most common type of alimony is General Alimony. This is the periodic payment of support to a dependent former spouse, usually paid in monthly or weekly installments. This type of alimony can be awarded in a marriage of any length, but terminates after a certain number of months, which is a certain percentage of the duration of your marriage. Generally, the alimony award is 30-35% of the difference in income between the payor spouse and the recipient spouse.
General Alimony can terminate if the recipient spouse begins to cohabitate with another person for a period of at least 3 months. General alimony also terminates when the payor spouse dies, the recipient spouse dies, remarriage of the recipient spouse, or the payor spouse reaches full retirement age.
The next type of alimony is called Rehabilitative Alimony. This type of alimony is awarded for a marriage of any length, however, the alimony payments cannot last for more than 5 years. This, too, is paid in periodic (monthly or weekly) installments. The purpose of this alimony is to allow the recipient spouse to become more self-sufficient while receiving the alimony payments. Rehabilitative alimony terminates upon the death of the payor spouse, death of the recipient spouse, remarriage of the recipient spouse, or by a specific event in the future, as defined by a court order.
Another type of alimony is Reimbursement alimony. This type of alimony is awarded in short-term marriages of not more than 5 years. The purpose of this alimony is to compensate the recipient spouse for his or her contributions to the financial resources of the payor spouse. This type of alimony can be made as a one-time payment or in periodic payments. Reimbursement alimony terminates upon the death of the recipient spouse or on a specific date.
The last type of alimony is Transitional Alimony. This type of alimony is awarded for short-term marriages of 5 years or less. The purpose of this type of alimony is to transition the recipient spouse to a certain adjusted type of lifestyle or location. Payments of transitional alimony are made in periodic installments, or in a one-time payment. Transitional Alimony lasts for not more than 3 years from the date of divorce, and terminates upon the death of the recipient or on a specific date.
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