Real Estate Newsletter October 2008 Issue V
New Regulation of Lenders and Brokers in the Making of Sub-Prime Home Loans
New mortgage legislation sets forth new standards and obligations on mortgage brokers and lenders in the making of a sub-prime home loan.A sub-prime loan is defined in the act as a first mortgage with an APR three or more points above the current yield on United States Treasury Securities, or one and three-quarters points above the conventional mortgage rate. For a second mortgage the thresholds for inclusion in the Act are five points above the yield on U.S. Treasury securities or three and three-quarters points above the conventional mortgage rate.
The following new procedures and requirements apply to sub-prime loans:
- A statutory duty of good faith and fair dealing is imposed on Lenders and Brokers with respect to any contract they have with a borrower, and are required, in most cases, to provide the borrower with a written notice describing the terms of the loan at least three days prior to closing;
- The lender cannot make the loan unless it reasonably believes that one or more of the obligors has the ability to make the payments on the loan at the “fully indexed rate,” i.e.,the maximum rate allowable under the terms of a variable rate mortgage, and without reference to any equity in the mortgaged home;
- No lender may make a sub-prime loan used to pay off a “special mortgage” (a mortgage subsidized or guaranteed by a governmental entity or non-profit organization, like the FHA or CHFA)unless the borrower first obtains written certification that he or she has received mortgage counseling from a third party counselor approved by the U.S. Department of Housing and Urban Development;
- No sub-prime home loan may contain a prepayment penalty or a provision increasing the interest rate on default, these provisions are now rendered unenforceable;
- No broker or lender may make or offer a sub-prime refinance loan to a borrower unless the loan provides a “tangible net benefit” to the borrower.
The Act does exempt Certain loans, notably FHA loans, from these new requirements. The Act also creates a new statutory cause of action to borrowers damaged by any violation of these new standards.
This is only a summary of the Act. Please feel free to contact us with any specific questions regarding its terms and provisions.
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Liquor Liability Newsletter October 2008 Issue IV
Association Argument Against Alpaca Abortions Assumed Abandoned After Allegations Are Approved
A claim of reckless misconduct survived a Motion to strike where a property owner had been warned that a fireworks display might cause spontaneous abortions in a neighboring alpaca herd. In Moore Brook Farms, LLC vs. Salisbury Winter Sports Association, Inc, 45 CLR 13, 464 (Gallagher, J.), the defendant proceeded with a fireworks display after being expressly warned that a nearby alpaca herd did not enjoy fireworks displays and often expressed their displeasure with spontaneous abortions. As the Association acted intentionally with a disregard with the potentially harmful results of its actions, the alleged facts were legally sufficient to support common law recklessness allegations. While of little significance outside of the alpaca community, the decision is notable as few Connecticut Superior Court decisions lend themselves to such exceptionally alliterative titles. “Polluted Patron Pleads Potable Provider Participation Precipitated Problems” was the last significant alliterative title in recent memory when used to describe a statutory Dram Shop Action.
Liquor Statue and Regulations Book
The 2009 RegBook is being prepared for publication in October. If you would like a free copy, just email us a request with your mailing address. Requests from businesses for multiple copies for their employees will be accommodated depending on availability. If you think you would like to advertise your business in the Regbook, just call.
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General Liability Newsletter October 2008 Issue IV
Mother who Witnessed Injuries to Her Child Did Not Suffer a “Bodily Injury,” Within the Terms of Her UM/UIM Insurance Policy
On December 24, 2004, Andrew Terra and his mother were traveling in their vehicle when it was struck by the defendant. Andrew suffered injuries as a result of the accident, and his mother claims she suffered emotion distress as a result of witnessing the injuries to her son. The relevant automobile insurance policy stated that the bodily injury coverage with liability limits was “$100,000 for each person and $300,000 for each accident.” The policy defined the liability limits for the “per person provision” of the policy as “the most that Metropolitan would pay for all damages including…emotional distress…arising out of bodily injuries sustain by any one person as a result of any one accident.”
The plaintiff and defendant stipulated to the facts and settled the claims regarding Andrew for the policy limit of $100,000. The sole issue for the Court to decide was whether or not the mother was entitled to recover for her claim based on emotional distress under the policy. The plaintiff claimed that her emotional distress was a distinct “bodily injury” under the policy and thus she was entitled to collect as a separate and distinct “per person” claim under the policy. The defendant claimed that the plaintiff could only recover under a single “per person” clause, which had already been exhausted when Andrew was paid the policy limit. The trial court ruled that the mother was not entitled to collect for her injuries, and the plaintiff appealed.
The Supreme Court, in its analysis, looked to the specific terms of the insurance policy. The court relied on previous decisions which held that emotional distress, without physical harm, did not constitute a “bodily injury.” Since the mother’s alleged emotional distress did not constitute a “bodily injury” she was not entitled to recover under the policy as a separate “per person” claim. She was also not entitled to collect under the limit of coverage regarding her son because he had already exhausted the policy limits. Therefore, the Court held the mother was unable to collect under the applicable insurance policy.
Association Argument Against Alpaca Abortions Assumed Abandoned After Allegations Are Approved
A claim of reckless misconduct survived a Motion to strike where a property owner had been warned that a fireworks display might cause spontaneous abortions in a neighboring alpaca herd. In Moore Brook Farms, LLC vs. Salisbury Winter Sports Association, Inc, 45 CLR 13, 464 (Gallagher, J.), the defendant proceeded with a fireworks display after being expressly warned that a nearby alpaca herd did not enjoy fireworks displays and often expressed their displeasure with spontaneous abortions. As the Association acted intentionally with a disregard with the potentially harmful results of its actions, the alleged facts were legally sufficient to support common law recklessness allegations. While of little significance outside of the alpaca community, the decision is notable as few Connecticut Superior Court decisions lend themselves to such exceptionally alliterative titles. “Polluted Patron Pleads Potable Provider Participation Precipitated Problems” was the last significant alliterative title in recent memory when used to describe a statutory Dram Shop Action.
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Our Firm is Expanding!
Trendowski & Allen opened an office in Westerly, Rhode Island. In addition to allowing us to serve more clients, the expansion will allow us to better meet the needs of our existing clients by expanding the scope of matters we can represent them in. We remain committed to providing the same excellent level of service to all our clients both in Connecticut and in Rhode Island. Please feel free to contact us if you have any questions or concerns.