One of the considerations in deciding whether you should hire a lawyer to help you fight your foreclosure is the cost. It's essential to understand how legal fees work to make sure that you don't end up paying more than you can afford.
Most foreclosure defense attorneys structure their fee agreements with homeowners in one of three ways:
Read on to learn more about the different ways that foreclosure defense attorneys charge for their services, the pros and cons of the various fee arrangements, and generally how much an attorney will likely charge to represent you in a foreclosure action.
Some foreclosure defense attorneys charge an hourly rate for their services. The rate can range from around $100 per hour to several hundred dollars per hour. With this type of fee arrangement, the lawyer generally collects an initial retainer—an advance payment to the attorney before starting to work on your case—of several thousand dollars. The retainer amount and hourly rate vary widely, depending on the attorney's experience and the customary rates in the area.
Say you give your foreclosure defense attorney a $2,000 retainer. She charges $200 per hour. First, she reviews all of the documents in your case. Then, she prepares and files an answer and affirmative defenses to the foreclosure action. All of this takes five hours. The attorney also spends time preparing for and attending a foreclosure mediation with you. You'll also get billed for the time it takes to make phone calls and emails related to your case. This work, too, adds up to five hours. The retainer is now gone, and the attorney hasn't even attended any foreclosure hearings yet. Because the attorney must do more work, you'll have to make further payments.
The benefit to this type of fee arrangement is you'll only pay the attorney for the amount of time actually worked on your case. The downside is that while the attorney will probably be able to give you a likely range of what you'll pay in total, you won't get an exact price as far as what the total cost of the foreclosure defense will be—and hourly fees can add up quickly.
Some attorneys charge a flat fee to represent homeowners in a foreclosure. Generally speaking, the fee can range from $1,500 to $4,000, depending on the case's complexity.
The benefit to paying a flat fee is that you know ahead of time exactly what the total cost of your foreclosure defense will be. Whether it takes five months or two years to dismiss the foreclosure—or for the lender to complete the process—you know that this is all you'll pay. The downside is that not all foreclosure attorneys offer this option, and you'll have to pay the fee upfront, which is difficult for many distressed homeowners.
Some foreclosure attorneys charge an upfront retainer ranging from several hundred to several thousand dollars and then a monthly fee (like $500) for each month that the foreclosure is pending. In addition, attorneys have been known to charge an extra fee on top of this amount, called a "contingent fee," if the case is dismissed due to the firm's efforts.
The benefit of paying a monthly fee is that you know what your attorney will cost each month without variation. Also, the attorney has an incentive to keep you in the property for as long as possible (if that's your goal). The downside is that you must pay this amount each month, even if little activity takes place in your case during that time.
Foreclosure defense attorneys will also charge for costs, like mailing, travel expenses, and court costs, on top of their fee.
When the financial crisis occurred, it became difficult for many people, including attorneys, to find work. As a result, many attorneys became foreclosure defense "experts" overnight marketing their services to homeowners in distress. In some cases, the fees that attorneys charge for services related to foreclosure aren't reasonable. So you need to be careful and do your research when hiring an attorney to fight your foreclosure. Ultimately, when trying to decide if a foreclosure defense fee is reasonable, ask yourself whether the attorney is charging a fair amount considering the services provided or whether the lawyer is trying to get a windfall from your situation.
Be aware, as well, that many scammers prey upon homeowners in foreclosure. Take steps to avoid foreclosure rescue scams.
To find out precisely what it will cost you to fight a foreclosure with a lawyer's help, make an appointment to talk to a foreclosure attorney in your area.