Should You Hire an Attorney?
The Truth about Loan Remodification Programs
In essence, a loan remodification program, or “loan mod” is simply a renegotiation of your original mortgage with your original lender. It is not a refinance where you try to get a better deal with a lower APR from a different lender.
There are many types of programs available – some are government sponsored, and others are available with your own lender. However, getting one is next to impossible without knowing the ropes, and that usually involves hiring an attorney to get through the nitty gritty.
The problem with hiring an attorney is that they cost money. The logic here is clear: if you can’t afford to pay your mortgage, where are you expected to come up with the retainer and additional fees for a qualified attorney? It’s a catch 22 though.
Much depends on why you are looking at getting a remodification. If you are having trouble paying your mortgage, your lender might not even be interested in working with you, especially if you are current. They have no reason to decrease your principle or APR until you are faced with foreclosure.
If you are already receiving default notices that threaten foreclosure, fight back. For your own good, an attorney will be your best bet unless you are ready willing and able to just give your house back to the bank. If you truly want to stay there, and you do want to work out a deal where you can pay a more affordable housing payment, your best bet is using a reputable attorney.
Your main goal in hiring an attorney is this: during a foreclosure, there are many court hearings that happen and rulings are made and decisions are handed down on your behalf. The problem is the laws in most states specifically state that no one actually needs to notify you of these hearings! In other words, plans are being made that involve action on your part, yet you are totally unaware of these proceedings. It is quite conceivable that you could be under the impression that you are working with your lender and waiting some type of feedback, only to answer the door one day to be served with your final eviction notice.
Hiring an attorney precludes this from happening. One of the major tasks that your attorney will undertake on your behalf is to monitor court records to find out when your lender is requesting hearings. Your attorney will alert you, and he will attend on your behalf. He will also represent your best interests – something that is never done when these hearings are held literally behind your back.
Be careful whom you hire. Because of the recent surge in this burgeoning industry, there are many unscrupulous individuals out there who are willing to take your money, cash you checks, and disappear. Before handing over any money, research the individual, check for complaints with the local BAR association, and even ask for references from friends and neighbors. It’s much better to deal with established companies than single attorneys.
With or without an attorney, you will most likely go through what is called a three month trial period where you are required to pay only a portion of your original mortgage. During this period the bank or lender is doing a full financial vetting of your financial picture and taking into consideration your perceived hardship vs. your ability to pay.
However, if you do choose to pay only the partial payments the lender is requesting, you will be reported to the credit bureau as “making only partial payments” – even though the lender said it was OK to do this. Rather than making partial payments, make the full payments if at all possible. Once you are reported as making partial payments, your FICO score could take a significant hit of 50 – 100 points! AND when the lender finishes up your financial background check, as ridiculous as this might seem, your new and lower FICO score will be taken into consideration by the lender who helped cause the problem to begin with!
Before making any decision at all, and certainly before defaulting on your mortgage payments, find a good attorney who is experienced in these proceedings, and take advantage of a free consultation. It’s important to know your rights – your lender certainly isn’t going to tell you!