Should I Hire a Lawyer to Help With My Mortgage Modification?

A "loan modification" is a permanent restructuring of your mortgage loan where the lender changes one or more of the terms so that your payments are more affordable. With a modification, the lender might agree to do one or more of the following to reduce your monthly payment:

• reduce the interest rate
• convert from a variable interest rate to a fixed interest rate
• forbear some of the principal balance, or
• extend the length of the loan term.

To get a modification, you usually have to submit an application to your servicer, along with supporting documents, like recent pay stubs and bank statements.

If you’re thinking about applying for a loan modification, 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 modification on your own, in some instances—say you need help understanding your legal rights or the servicer violates the law—hiring an attorney just might make the difference between getting your mortgage modified and losing your home to foreclosure.

Below are some situations, with more details below, where you should consider hiring, or at least consulting with, an attorney:

• you're not sure if a modification will help you avoid a foreclosure
• you don't understand how to fill out the loss mitigation application
• your servicer violates federal or state laws during the modification process
• your servicer fails to comply with state foreclosure laws, or
• your servicer denies your request for a modification, and you want to make an appeal.

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 circumstances, the attorney might recommend pursuing a mortgage modification, 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 might 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 an 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. You can also get free help with your application package from a HUD-approved housing counselor.

Your Loan Servicer Violates Federal or State Loss Mitigation Laws

If your servicer doesn't comply with federal laws or any applicable state laws that govern the loss mitigation process, an attorney can help you enforce your rights.

For example, under federal law, the servicer generally can't start a foreclosure until you're more than 120 days delinquent on the loan. This period before foreclosure starts is supposed to provide you with sufficient opportunity to seek an alternative to foreclosure, like a modification. So long as you send in a complete application, the servicer also can't start the foreclosure while your application is pending. If your servicer starts the foreclosure early in violation of the law, an attorney can help stop it.

Because it's very difficult to get your home back after a completed foreclosure, you want to deal with violations of loss mitigation laws before the sale. Having an attorney on your side gives you a better chance of getting results before your home is sold.

Your Loan Servicer Violates State Foreclosure Laws

State law governs the foreclosure process. If your servicer violates state law while foreclosing on your home, your attorney might be able to use the violation or violations as leverage in getting you a loan modification. Keep in mind that servicers often make mistakes when servicing loans and in the foreclosure process. A lawyer could uncover errors that you won't even notice.

Your 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 might be able help you in showcasing why the servicer made an error in denying your application so that you're 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

If you've spoken to the servicer about getting a modification, done your homework to educate yourself about the process, are confident the servicer hasn't violated the law, and feel you have a good understanding of what goes into the application, you likely can submit all of the necessary documentation and navigate the process adequately on your own.

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 foreclosure is complete—perhaps you need time to come up with the funds to reinstate the loan or refinance—you can probably submit a modification application confidently without getting 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 servicer isn’t abiding by the law, you should consider consulting with a qualified, reputable foreclosure attorney who can help you with the process.