FYI

Do You Qualify for Refinancing or Other Assistance Under the New Homeowner Affordability and Stability Plan?

President Obama recently unveiled his Homeowner Affordability and Stability Plan as part of a comprehensive strategy to get the economy back on track. The Plan states that it will “help up to 7 to 9 million families restructure or refinance their mortgages to avoid foreclosure.” The key components of the Plan are:

Enable up to 4 to 5 million Responsible Homeowners to Refinance and Reduce Their Monthly Payments

Under current rules, most families who owe more than 80 percent of the value of their homes have a difficult time securing refinancing (For example, if a borrower’s home was worth $200,000, he or she would have limited refinancing options if he or she owed more than $160,000.) Under the Obama Plan, 4 to 5 million homeowners who took out conforming loans[*] owned or guaranteed by Freddie Mac or Fannie Mae will be provided the opportunity to refinance through the two institutions over time. The Treasury Department has provided the following two examples to illustrate how refinancing through Freddie Mac and Fannie Mae would work:

· In 2006: Family A took a 30-year fixed rate mortgage of $207,000 on a house worth $260,000 at the time. (The family put just over 20% down.) They received a Fannie Mae conforming loan with an interest rate of 6.50%.

· Today: Family A has about $200,000 remaining on their mortgage but their home value has fallen 15% to $221,000. – Their “loan-to-value” ratio is now 90% making them ineligible for a Fannie Mae refinancing.

· Under the Refinancing Plan: Family A can refinance and obtain a rate of 5.16%. This would reduce their annual payments by nearly $2,350.

· In 2006: Family B took a 30-year fixed rate mortgage of $350,000 on a house worth $475,000 at the time. (The family put just over 26% down). They received a Fannie Mae conforming loan with an interest rate of 6.50%.

· Today: Family B has about $337,460 remaining on their mortgage but their home value has fallen to $400,000. – Their “loan-to-value” ratio is now 84%, making them ineligible for a Fannie Mae refinancing.

· Under the Refinancing Plan: Family B can refinance and obtain a rate of 5.16%. This would reduce their annual payments by nearly $4,000.

Create a $75 Billion Homeowner Stability Initiative to Reach Up to 3 to 4 Million At-Risk Homeowners

The Treasury Department, working with other federal agencies, will undertake a comprehensive strategy to prevent millions of foreclosures and help families stay in their homes. This initiative is intended to reach millions of responsible homeowners who are struggling to afford their mortgage payments because of the current recession, yet cannot sell their homes because prices have fallen so significantly. The initiative helps those who commit to make reasonable monthly mortgage payments to stay in their homes – providing families with security and neighborhoods with stability. The Treasury Department has provided the following example to illustrate how this initiative would work:

· In 2006: Family C took out a 30-year subprime mortgage of $220,000, on a house worth $230,000 at the time (they put less than 5% down). Their mortgage broker – Mom & Pop Mortgage – sold their loan to Investment Bank. The interest rate on their mortgage is 7.5%.

· Today: Family C has $214,016 remaining on their mortgage but their home value has fallen –18% to $189,000. Also, in November, one parent in Family C was moved from full-time to part-time work, causing a significant shock to their income. Their loan is now 113% the value of their home, making them “underwater” and unable to sell their house. Meanwhile, their monthly mortgage payment is $1,538 and their monthly income has fallen to $3,650, meaning the ratio of their monthly mortgage debt to income is 42%.

· Under the Homeowner Stability Initiative: Family C can get a government sponsored modification that – for five years – will reduce their mortgage payment by $406 a month. After those five years, Family C’s mortgage payment will adjust upward at a moderate, phased in level.

On March 4, 2009, the U.S. Treasury Department amplified the Plan by issuing Guidelines to enable lenders/loan servicers to encourage modifications of eligible mortgages. The Guidelines and other useful materials in connection with the Plan can be obtained at “FinancialStability.gov.”

Among other things, the Guidelines provide information on eligibility criteria for loan modifications and the terms and procedures participating lenders/loan servicers must follow under the Plan. Under the Plan, lenders/loan servicers are eligible for “Servicer Incentive Payments” for each eligible mortgage modification meeting the Plan’s standards. To be eligible for these incentives, loan servicers must enter into program agreements with the Treasury Department. Homeowners may contact their lender/loan servicer to find out if the homeowner is eligible to participate in the program.

This article provides a preliminary and brief overview of President Obama’s Plan. As you know, assistance in connection with refinancing a home is available from attorneys under the Fund’s Legal Services Plan.

[*]A “conforming loan” is a mortgage that is equal to or less than the dollar amount established by the conforming loan limit set by Fannie Mae and Freddie Mac's Federal regulator, The Office of Federal Housing Enterprise Oversight (OFHEO) and meets the funding criteria of Freddie Mac and Fannie Mae. Mortgages that exceed the conforming loan limit are classified as non-conforming or “jumbo” mortgages.

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PRESERVING DIGNITY AT THE END OF LIFE
MEDICAL ORDERS FOR LIFE SUSTAINING TREATMENT
By: Mirkin & Gordon, P.C.

On July 8, 2008, Governor Paterson signed into law, Public Health Law §2977, providing for the Medical Order for Life Sustaining Treatment or “MOLST”. The MOLST is the newest addition to the end-of-life medical directives now available to individuals.

The MOLST form is completed by a health care professional based upon a patient’s wishes for life-sustaining treatment. The patient and a medical doctor must sign the MOLST form, which is on bright pink paper so that it can be easily identified in the case of an emergency. The MOLST form is not intended to replace traditional advance directives including the Health Care Proxy and Living Will, which do not require physicians to be involved to complete. These documents are future directives and can be dormant in existence for many years. However, the MOLST is intended to apply immediately for treatment of a serious illness of a person who is nearing the end of life.

The MOLST gives individuals the power to make their wishes known, while providing health care professionals with the authority to carry out those wishes. A MOLST does not require further conversations with the patient or health care agent at the time of a health emergency or need for treatment. The MOLST is not hospital or admission specific, but can be transferred from one health care setting or care level to another (e.g. nursing home, rehab center, etc.). The original MOLST form should be on or near the patient at home and travel with him/her to different care settings.

While attorneys do not have the power to complete the MOLST, they can inform and suggest that clients engage in the process with their physicians. To that end, we encourage you to contact the Legal Plan to schedule an appointment if you have an interest in this new directive.

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2009 REVISIONS TO THE SHORT FORM POWER OF ATTORNEY
By: MIRKIN & GORDON, P.C.

On January 27, 2009, Governor Paterson signed Chapter 644 of the Laws of 2008, which amended the General Obligations Law in relation to Powers of Attorney. The intention was to address a number of abuses and omissions in the old law. The new law will be effective as of September 1, 2009 and will provide a new Statutory Short Form Power of Attorney.

Under the present law an agent could easily misuse the broad powers granted to him by the principal to his own financial gain if the principal became incapacitated. In a recent Court of Appeals case, in a three week period before the principal died, an attorney-in-fact who was given broad powers to make unlimited gifts to himself transferred over $800,000 to himself to the detriment of the principal’s heirs.

The recent statutory amendments are designed to provide greater notice to the principal of the significance of the document and emphasize the agent’s responsibilities and obligations relative thereto.

The new statutory short form Power of Attorney contains a specific “Caution” message to the principal expressly describing the significance of the document as well as the agent’s rights and obligations. It also includes “Important Information for the Agent” (e.g. the document creates a special legal relationship between the agent and the principal until terminated or revoked requiring the agent to act in accordance with any instructions from the principal; avoid conflicts that would impair the agent’s ability to act in the principal’s best interest; keep the assets of the principal distinct and separate from the agent’s, etc.) and requires the agent to countersign the form, which is not effective unless and until the agent so countersigns.

Further, to protect against financial exploitation if the principal becomes incapacitated or is otherwise unable to personally monitor the agent’s actions, he can designate a third-party to monitor the Agent’s actions. The monitor can request and compel the agent to provide copies of all transactions entered into or by the agent on behalf of the principal to ensure that he is acting within the principal’s interests.

The new law expands the definition of parties who are bound to honor a Power of Attorney. It also sets forth specific circumstances under which a party can refuse to honor a Power of Attorney and the consequences for improperly refusing to do so.

The firm is preparing to implement the new Statutory Short Form Power of Attorney under the Fund’s legal services plan of benefits pursuant to the September 1, 2009 effective date for the same. In light of the foregoing, if you have an interest in, or wish to revise an existing Power of Attorney, you may make an appointment in the usual manner to meet with a Legal Plan attorney.

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