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Protecting Your Heirs from Foreclosure

It’s an all too familiar story – couple meets, falls in love, and gets married. They buy a house, but only one spouse signs the original loan documents and thus becomes the primary borrower. Then, the primary borrower passes away. The remaining spouse (typically the widow) is unable to pay the mortgage. As a result, the house is foreclosed.

This happens to many couples in the United States, and the spouse who didn’t sign the original loan documents scrambles to keep her home and pay the mortgage.

How can you avoid this scenario from happening to you?

Mortgage Protection Insurance

Mortgage protection insurance covers your mortgage if you lose your job or become disabled. It also pays off your mortgage when you die. Whether you benefit from mortgage protection insurance really depends on your health, financial situation and what you want to happen if the worst befalls you or your partner.

Mortgage protection insurance is life insurance that pays your mortgage after a certain triggering event such as death, disability, or job loss. The cost depends on the amount of your mortgage, your age, and your health. For disability mortgage protection insurance, costs also vary depending on your occupation.

If you purchased mortgage protection insurance that pays off your mortgage after your death, the insurance company sends a check directly to your mortgage company. This leaves your heirs with your home unencumbered by the mortgage. Payments also go directly to your mortgage company if you purchased job loss or disability insurance, but it only happens for a certain time period (about a year or two). Further, there can be a waiting period before payments are finally made.

Life Insurance

While mortgage protection insurance is a type of life insurance where the proceeds can only be used to pay one’s mortgage, many believe a better option is to have regular term life insurance. With life insurance, your heirs can use the money they receive in whatever way they see fit. Moreover, whereas mortgage protection insurance typically has an age limit (around 45 or younger for a 30 year mortgage, or 60 or younger for a 15 year mortgage), no age limits exist for life insurance.  Foreclosure

Further, on direct comparison, term life insurance can be cheaper than mortgage protection insurance. If you’re healthy and have never used tobacco, you pay more for coverage with mortgage protection insurance than you would for life insurance.

Mortgage protection insurance can provide benefits to those who don’t qualify for life insurance. For example, people with poor health or a record of past medical conditions may not be eligible for life insurance. Mortgage protection insurance is less strict and, as a result, more people qualify.

Regardless, financial experts typically do not recommend any insurance that only pays for specific bills such as mortgage protection insurance.

Financing the Home

If your heirs want to keep the home but are having a tough time paying the mortgage, they could refinance the loan. Refinancing the mortgage may help you get a better rate, lengthen the term, and lower the monthly payments. This option allows heirs to stay in the house. However, this may not be an option if you have damaged credit or for some other reason you cannot qualify for a mortgage on your own.

In that case, a reverse mortgage may work. Reverse mortgages do not have credit or income requirements, but you must be at least 62 years old and your mortgage balance must be around half of the home’s value or less. The loan is called a reverse mortgage because instead of making monthly payments to a lender, the lender makes payments to the borrower, and there are no monthly principal or interest payments.

With a reverse mortgage, you are still required to pay real estate taxes, utilities, hazard and flood insurance premiums. When the home is sold or no longer used as the primary residence, the cash and interest must be repaid, and the remaining equity can be transferred to the heirs.

After Scalia: The Battle Over Birth Control Wages On

Since Roe v. Wade, the question of women’s healthcare turned into a national debate. Over time, our society has become deeply divided over the question of religion. So the need for women’s healthcare has ultimately turned into a debate about abortion.

The Affordable Care Act (ACA) requires that employers provide women’s healthcare to employees. But that rule made many religious business owners claim that the ACA infringed on their first amendment rights. So the government created a way for them to opt out of providing birth control to their employees by filling out a form.

However, a recent Supreme Court case, Zubik v. Burwell, questioned whether requiring religious non-profit organizations to fill out the exemption form violates their first amendment rights. The proponents of the case, the Petitioners, argued that it violates the Religious Freedom Restoration Act (RFRA) because the form requires them to facilitate birth control coverage.

What Is RFRA?

RFRA was enacted in 1993 to ensure “that interests in religious freedom are protected.” Its goal is to ensure that the government does not “substantially burden a person’s exercise of religion even if the burden results from” general application. Supreme Court 2

However, even if the law violates RFRA, there is an exception: if the Court can find that the need to violate RFRA outweighs the burden to the opposing party, then the government can ignore RFRA.

RFRA applies to all religions, but the main purpose of the Act was to protect Native American sacred lands and rites, like the use of peyote. These days though, RFRA is used to protect the religious freedom of individuals who believe that the use or promotion of birth control is a sin.

Balancing the Burden Between the Petitioners and the Government.

In essence, the Petitioners and the government are at odds over the balance of burdens, whether the government’s needs outweighs the petitioners’ needs. The government wants to eliminate as many roadblocks that employees would face, such as having to pay a doctor for birth control when all other medical services are covered.

This is not just one employee, but hundreds or thousands of employees. The Petitioners argue that filling out the form only streamlines the ACA, so it’s not as necessary as the government claims.

The Petitioners argue that the ACA accommodation that allows them to not provide birth control requires them to help employees get birth control. Even though the Petitioners may not be actively helping their employees, they believe that filling out the form is a sin.

However, the government concedes that the Petitioners’ religious beliefs are sincere. So they must accept that the Petitioners truly believe they are committing a sin. For the Petitioners, the question is whether they should obey their government or their God. So how can the government argue that the burden is not substantial?

The Courts Offered a Possible Solution, But It’s Very Specific.

The Court ordered the parties in Zubik v. Burwell to consider the following solution. The alternative solution would allow religious employers to inform the insurance company that they do not want their health plan to offer birth control. The employer will need to inform the insurance company when they receive the insurance bill.

So, the employer objecting on religious grounds does not submit a form to the government. Instead, the insurance company will already know that the employer does not wish to provide the use of birth control. When the employee receives insurance from their employer, the employee will know that there is no birth control coverage.

This solution may avoid the entire mess that the Petitioners face. However, this answer is just another temporary fix to the complicated tangle of issues surrounding birth control. To some people, birth control promotes promiscuity and kills unborn children. To others it helps regulate hormones, controls acne, reduces pain during menstruation, and other non-pregnancy related benefits.

There is a clear division about the benefit and uses of birth control. The division will prevent the Court from being able to make a clear decision. It is worrying that the Court is creating another stop-gap measure. But a temporary fix may be the only solution that works in the end.

Shaming Banks to Quicken the Foreclosure Process

Foreclosure can damage your credit beyond repair and leave you without a home. As much as you dread foreclosure, if you fall behind on your payments, you want it to happen quickly. Why? When homeowners receive notice of foreclosure but before the sale is complete, the homeowner is stuck in limbo. Property taxes and missed mortgage payments pile up, and your credit is damaged the longer foreclosure takes.

This is what happened to one woman in Buffalo, New York. After falling ill and being no longer able to care for her house, she decided to let the bank foreclose so she could recoup some funds. Her lawyer believed the process would take only six months, but it ended up taking seven years. To help speed up the process, she teamed with her Assemblymember and started a “Shame Campaign” to publicly humiliate banks into speeding up the foreclosure process. They posted hundreds of signs in the Buffalo area that said, “Shame on you, [insert bank name here], for not completing the foreclosure process.” And it worked. After three months of the “Shame Campaign,” the bank finally finished the foreclosure process – that is, after seven years and three months.

With debtors going through such extreme measures to finalize foreclosures on their homes, it begs the question: can banks legally delay foreclosures to the detriment of the debtor?

Delaying Foreclosure

Many mortgage lenders are hesitant to complete their foreclosure actions, and they have plenty of reasons. As long as the properties are not foreclosed, they are still listed as an asset instead of bad debt on the banks’ books. Banks do this with an eye to the future: as long as the property is listed as an asset, the bank is viewed more favorably should it merge or be acquired by another company. Foreclosure Protest

There are also a lot of costs associated with foreclosure. A bank may be reluctant to foreclose because they don’t want to pay the attorney’s fees and costs required to foreclose. There are also costs to rehabilitate and repair the property if the previous delinquent owners gutted the property. The bank may also not want to take title to the property as it would have to pay for property preservation and other costs of the property. In other words, the bank would have to pay insurance, taxes and electric bills. The bank would also have to pay for the cost of evicting any holdover tenant, which can be both messy and costly.

As a result, banks may decide not to foreclose, even after they’ve initiated proceedings. Whereas suspected criminals have a constitutional right to a “speedy trial,” there is nothing that legally requires banks to foreclosure quickly. Banks can delay foreclosure as long as they want to postpone the host of costs associated with foreclosure. Shaming banks into completing foreclosures may be the only way to expedite the process.

Zombie Title

In addition to delaying foreclosure, banks may also initiate foreclosure proceedings by issuing a notice of foreclosure, then unexpectedly dismiss the foreclosure. This is known as “Zombie Title.” Zombie title is known as a right to ownership and possession of a home that remains with the debtor who believes he or she has lost the property as a result of foreclosure.

It seems inconceivable that banks can decide not to foreclose after starting the foreclosure process, but it happens more often that you would think. They often occur in low-income areas where the lender does not want to assume responsibility for the upkeep of the property and wants to save money on property taxes. If squatters occupy the property or it falls into extreme disrepair, the bank may wash its hands of the property altogether.

States with the highest numbers of zombie properties include New Jersey, New York, Florida and Illinois. These states have a high number of foreclosures because of the long foreclosure process in those states. Since the process takes so long, owners tend to abandon their property.

Since title remains in the homeowner’s name, the homeowner is legally obligated to pay debts and expenses like property taxes, maintenance on the property, and HOA dues. A homeowner may not receive notice that the bank decided to stop the foreclosure process. As a result, debts associated with the property can come back to haunt homeowners who have no idea that they are still on title and are obligated to pay such expenses.

Starbucks Sued for Under Filling their Lattes

Some California residents have brought a class-action lawsuit against Starbucks for not filling their lattes up to the brim. Yep, you read that right.

The complaint claims Starbucks misled its’ customers by only filling their cups ¾ of the way full. According to their standard recipe guide, the Plaintiffs argue the missing 25% of the latte violates a whole slew of rights. Plaintiffs allege Starbucks breached an express warranty, breached an implied warranty of merchantability, received unjust enrichment, violated California’s Consumers Legal Remedies Act, violated California’s Unfair Competition Law, violated California’s False Advertising Law, negligent misrepresented their products, and committed fraud. The Plaintiffs further allege Starbucks made a conscious decision to under fill their lattes in order to save money on milk.

But don’t fret, because this was brought as a class action suit, so all you fellow latte drinkers are potentially entitled to the restitution, compensatory, and punitive damages the Plaintiffs are asking for. Oh yea, plus any interest tacked on for all those lattes you’ve bought!

Is This a Frivolous Lawsuit?

A lawsuit is frivolous when the Plaintiff knows there is little to no chance of succeeding on the merits, or lack of merits, of the case. Frivolous lawsuits can lead to fines in the thousands, contempt orders, or even criminal consequences in extreme situations. Starbucks

Let’s be honest, this is an absolutely absurd lawsuit, but the Plaintiffs may actually be able to win. Here’s a further look into what the Plaintiffs are claiming.

  • A breach of express warranty is anything that a seller represents to a buyer about the product.
    • The complaint alleges Starbucks expressly warranted their lattes contained “12 fl oz” for a Tall, “16 floz” for a Grande, and “20 floz” for a Venti, which is in fact true. The question is whether Starbucks breached their express warranty by only filling their lattes ¾ of the way to the top of the cup.
  • A breach of an implied warranty of merchantability is anything that is guaranteed to work as claimed.
    • Basically the same argument as above, except they added that the lattes were not fit within the market for their intended purpose.
  • Unjust enrichment is when one party is enriched at the expense of another.
    • Plaintiffs allege Starbucks was unjustly enriched in retaining revenue from the purchases of the lattes.
  • California’s Consumers Legal Remedies Act prohibits representing goods that have quantities, among other things, which they do not have.
  • California’s Unfair Competition Law prohibits unfair, deceptive, untrue or misleading advertising.
  • California’s False Advertising Law prohibits just what it says—false advertising.
  • Starbucks negligently misrepresented or negligently omitted material facts about the lattes.
  • Starbucks provided false or misleading material information and failed to disclose material facts about the lattes, i.e. fraud.

On the face of the legal issues presented, the Plaintiffs make some decent arguments that Starbucks misrepresented the actual size of their lattes. Although ridiculous, they may have enough to not be considered a frivolous lawsuit.

However, in order to win, they are going to have to prove that an average person who purchases the lattes expects to get exactly 12 ounces (or 16 and 20 ounces) in their latte. How many of us, when ordering a drink, expects it to be filled to the brim of the cup. I know I don’t. Wouldn’t filling the cup to the brim be quick to spill? I see another McDonald’s hot coffee lawsuit coming out of this.

Additional, the Plaintiffs need to prove actual harm in order to get an award for damages and that may be hard to do. The Plaintiffs allege harm because they state they would not have purchased the lattes on the same terms had they known the cups were in fact not filled all the way to the top.

Starbucks Can Fight Back

Starbucks has responded that they believe the case is without merit. Not only is each drink hand prepared, which inevitably results in variances of each drink, but Starbucks ensures that if a customer is unhappy with the preparation of their drink, they will remake the beverage at no cost to the consumer.

Starbucks can file a motion for summary judgment once all discovery is complete. Summary judgment is a judgment entered by the court in favor of one party without a full trial. These type of motions are filed if one party believes either the other doesn’t have enough evidence to prove their case or there is enough evidence that proves no liability.  Essentially, if Starbucks believes the Plaintiffs don’t have legal merits for the case, they can ask the court to make a decision without the need of a trial.

When you go to McDonald’s, or any other establishment, and order an iced tea, it’s filled with your beverage plus ice. You aren’t technically getting the full ounces represented on the cup. Based on the Plaintiffs’ arguments against Starbucks, all drink suppliers could potentially be sued on the same basis. A judgment in favor of the Plaintiffs would set a horrible precedent.

Will California Raise the Legal Smoking Age to 21?

In the 1950s, smoking was the epitome of cool. Movie stars such as James Dean and Humphrey Bogart were never without a cigarette. Actress Audrey Hepburn made smoking look glamorous. Advertisements even encouraged pregnant women to smoke to reduce their baby’s birth weight. Back then, we didn’t know just how harmful it is to blow smoke into your lungs.

Nowadays, we know that smoking causes a host of fatal diseases. The tobacco industry constantly loses customers when current customers quit or die from smoking-related illnesses. In order to survive, tobacco companies must attract a new generation of tobacco users, and that’s exactly who they target: the next generation.

California intends to protect today’s youth with new legislation. California’s current smoking law prohibits the selling of tobacco to any child under 18 years old, but the California legislature gave final approval to bills that would raise the smoking age to 21 and regulate electronic cigarettes. It is now awaiting a signature from Gov. Jerry Brown.

If it becomes law, California will be the second state alongside Hawaii to increase the smoking age to 21. More than 100 cities, including New York and Boston, have already raised the age limit.

Youth Related Smoking

Tobacco use in the United States is established primarily during adolescence. Whether they use standard cigarettes, electronic cigarettes, or hookahs, statistics demonstrate that nearly 9 out of 10 cigarette smokers first tried smoking by age 18. Even more alarming, each day in the United States, more than 3,800 youth aged 18 or younger smoke their first cigarette. No Smoking

Tobacco companies are savvy and use flavorings in their products to make them more appealing to youth. Most adolescents 18 or younger reported using a flavored tobacco product within the last 30 days.

The negative effects of smoking are staggering. Studies suggest if smoking continues at the current rate among youth in the U.S., 5.6 million of today’s Americans younger than 18 will die early from smoking-related illnesses. To give you further perspective, that’s about 1 out of every 13 Americans aged 17 or younger alive today.

Criticism of Legislation

In spite of the evidence that something needs to be done to protect today’s youth from this silent killer, experts that oppose the legislation claim that raising the smoking age to reduce tobacco use among teens does not work. Specifically, experts say that there is no research to show that raising the smoking age to 21 will deter teenagers from smoking.

Experts also claim that although the age increase may make it so less tobacco is sold to minors, there will be no effect in the ability of high school students to get cigarettes. They point to the existing evidence which demonstrate most people have tried their first cigarette before the legal age of 18.

Others claim that raising the age limit to smoke takes away a fundamental right afforded to all adults. In the United States, one needs to be 18 to vote or fight for the country. For all intents and purposes, people are considered adults as soon as they turn 18. Adults should be able to make decisions on their own without interference of government regulations.

Support of Legislation

Despite the naysayers, there is plenty of support for this legislation. Many believe that nicotine enslaves smokers in their addiction. Most people are unable to quit smoking in spite of numerous attempts to quit. If teenagers are unable to buy tobacco legally, it reduces the chance that they will become addicted at a young age.

Others hope that policies that reduce or delay initiation of smoking could have a large impact on public health. Raising the legal minimum purchase age of cigarettes from 18 to 21 could be an effective way to reduce youth smoking by making it harder for them to buy cigarettes. The legislation may also reduce the number of legal buyers teenagers encounter in their normal social circles, further limiting their exposure to tobacco products. Supporters think the legislation will prevent young people from dying prematurely because of lung cancer, stroke, emphysema, and heart disease. The American Academy of Pediatrics agree, claiming that premature deaths would decrease by 223,000, while lung cancer related deaths would decrease by approximately 50,000 per year.

Studies also suggest that medical cost savings far outweigh costs incurred through enforcement or checking IDs. Individual retailers incur the cost of checking IDs and the state incurs costs on enforcement, but overall states save in reduced health care expenditures.