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

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 a foreclosure.

Understanding Mortgage Modifications

A loan 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 modification, the lender might agree to do one of 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 of the length of the loan term.

In order to get a modification, you usually have to submit an application to your servicer, along with certain documents, like recent pay stubs and bank statements. (Learn more about how to get a modification, as well as other alternatives to foreclosure.)

When You Should Consider Hiring 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 might 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 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 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 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 120 days after you default on the loan. This time period is supposed to provide you with sufficient opportunity to seek an alternative to foreclosure, like a modification, before the foreclosure gets rolling. 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. (Learn more about when foreclosure may begin.)

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(s) as leverage in getting you a loan modification. Keep in mind that servicers make mistakes all the time 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 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 get a modification. 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 about 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 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 servicer isn’t abiding by the law, you should consider consulting with a qualified, reputable attorney who can help you with the process. (To learn more about when you do and don't need a foreclosure attorney, how to find and hire an attorney, and what to expect from your attorney, see Do I Need a Foreclosure Attorney? and Foreclosure Attorneys: Why You Might Want to Hire One, What to Expect, and When to Fire One.)