If you’re thinking about asking your lender to modify your mortgage, you’ll need to decide if it is worth paying for an attorney to help you with the process. While you have every right to apply for a mortgage modification on your own, in some instances (say you need help understanding your legal rights or the mortgage servicer violates the law by dual tracking your loan during the modification process), hiring an attorney just might make the difference between getting your mortgage modified and losing your home.
Understanding Mortgage Modifications
Before you can figure out if you should hire an attorney to help you with a mortgage modification, you must first understand the basics about modifications. A mortgage modification is a permanent restructuring of your mortgage where the lender changes one or more of the terms of the loan so that it's more affordable. With a mortgage modification, the lender may agree to do one of more of the following to reduce your monthly payment:
- reduce the interest rate
- forgive some of the principal balance
- convert from a variable interest rate to a fixed interest rate, or
- extend of the length of the term of the loan.
In order to get a mortgage modification you usually have to submit an application to your mortgage servicer (the company you make your monthly mortgage payments to) along with certain documents, such as recent paystubs and bank statements. (Learn more about mortgage modifications and other alternatives to foreclosure.)
When You Should Hire an Attorney to Help With Your Mortgage Modification
Below are some situations where you should consider hiring, or at least consulting with, an attorney.
You Don’t Know What to Do in Your Situation
If you aren’t sure what to do (say you’re facing foreclosure, but you aren’t sure if a modification is right for you) and want to know about all of your options, an attorney can help you understand your legal rights and give advice about the best course of action in your situation. Depending on your individual circumstances, the attorney may recommend:
- pursuing a mortgage modification and/or
- fighting the foreclosure in court, or
- giving up the property in a short sale or deed in lieu of foreclosure.
You Don’t Know How to Fill Out the Modification Paperwork
Hiring an attorney may be a good idea if you want a mortgage modification, but you don’t understand the application process or have a complicated situation. For example, it may be worthwhile to hire an attorney if you’ve spoken to your loan servicer about a modification, but are confused about:
- how to fill out the application
- what documentation you need to submit along with application, or
- how to explain your financial hardship or situation in the application.
An attorney can help you fill out paperwork and make sure you present your situation in the best light possible. (Keep in mind you can also get free help with your application package from a HUD-approved housing counselor rather than hiring an attorney to help you. Go to the U.S. Department of Housing and Urban Development’s webpage to find the contact information for a housing counseling agency near you.)
Your Loan Servicer Is Dual Tracking
If your mortgage servicer or lender is dual tracking your loan (pursuing a foreclosure while also still deciding on your loan modification) in violation of new federal and other mortgage servicing rules, an attorney can help you enforce your rights.
For example, under new mortgage servicing rules, the lender cannot start a foreclosure until 120 days after you default on the loan. This is supposed to provide you with sufficient time to seek an alternative to foreclosure, like a mortgage modification, before the foreclosure gets rolling. The servicer also cannot start the foreclosure while your application is pending. If your servicer starts the foreclosure early (in violation of the rules), an attorney can help stop it.
Since it is very difficult to get your home back after the lender completes a foreclosure, you want to deal with violations of the laws that prohibit dual tracking prior to the sale. Having an attorney on your side gives you a better chance of getting results before the sale takes place.
Your Mortgage Servicer Denies Your Modification Request and You Want to Appeal
If the servicer denies your modification request, in many cases, you’ll also get some time to make an appeal. An attorney may be able help you in showcasing why the servicer made an error in denying your application so that you are more likely to get approved for the modification in your appeal.
When You Might Not Need an Attorney to Help With a Mortgage Modification
The following are a few situations where you probably don’t need to hire an attorney to assist with the modification process.
You Have a Good Understanding of the Mortgage Modification Process
There's no requirement that you must have an attorney to obtain a mortgage modification. If you have spoken to the servicer about the modification, have done your homework to educate yourself about the mortgage modification process, and feel you have a good understanding about what goes into the application, you can certainly submit the application on your own. (Learn more about how to apply for a modification on your own in Nolo’s article Do It Yourself Mortgage Loan Modification.)
You Want to Submit a Modification Application to Gain Time in the Home
If your main goal is simply to gain some time before the lender completes a foreclosure (perhaps you need time to come up with the funds to reinstate the loan or refinance), you can submit a modification application without an attorney’s assistance. While the application might not be perfect, it can still buy you some time. (And who knows, you might actually get a modification that lowers your monthly mortgage payment.)
The Bottom Line
Ultimately, if you find yourself having difficulty with the application or your mortgage servicer isn’t treating your modification request fairly, you should consider consulting with a qualified, reputable attorney who can help you with the process. (Learn more about when you do and don't need an attorney, how to find and hire an attorney, and other ways you can get foreclosure help in Nolo’s Foreclosure Lawyers & Other Foreclosure Help area.)