What Is a Loan Modification Lawyer?


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Loan modifications are most commonly made to mortgages, often because homeowners are having difficulty making mortgage payments. A loan modification lawyer restructures an existing contract to modify the repayment terms of a loan.

Functions of a Loan Modification Lawyer

A loan modification lawyer may be able to help with the loan modification process in a number of ways. This includes offering the following:

Explanation of Legal Rights

One of the biggest advantages of hiring a loan modification lawyer is to have someone provide the borrower with unbiased information about the borrower’s rights, responsibilities and options. By having this objective information, the borrower can make informed decisions.

Loan modifications permanently restructure the mortgage by altering one or more terms. The end result is usually to reduce the amount of the monthly payment. This can usually be completed by reducing the interest rate on the loan, forgiving a portion of the principal balance, converting the interest rate from a variable interest rate to a fixed one or extending the term of the loan.
Loan modification lawyers can help explain the various options that are available to the borrower as well as the advantages and disadvantages of each option. These options may include securing a mortgage modification, forfeiting the property, placing the home for sale as a short sale or fighting a pending foreclosure suit.

A loan modification lawyer can also help represent the client’s interests in the event that the lender is not complying with relevant rules or regulations. For example, the lender may be dual tracking, which means that he or she is pursuing a foreclosure while also considering a loan modification.

Stop Foreclosures

A loan modification lawyer can often help stop foreclosures. By getting involved in the process, a loan modification lawyer may be able to convince the lender to halt foreclosure proceedings in order to bring about a resolution with the current borrower and to avoid the time, expense and complexity associated with a foreclosure.

An attorney may file an order to show cause to stop the foreclosure. Alternatively, he or she may help the borrower file for
bankruptcy which causes an automatic stay to halt other proceedings.

Individualized Attention

Many borrowers complain that their loan service providers do not answer calls or are slow about responding. During the mortgage crisis at the beginning of the 21st century, many financial institutions were bombarded with calls and communications regarding financial difficulties that were affecting borrowers’ ability to repay debt. A loan modification lawyer can pay specific attention to a client and his or her needs.

Negotiate with Lenders

Another advantage of using a loan modification lawyer is that he or she can negotiate with the lender for more favorable terms. Loan modification lawyers are aware of various programs that help underwater and borrowers otherwise in financial distress.

Completion of Paperwork

Modifying a loan often requires an extensive amount of paperwork. A loan modification lawyer can help borrowers complete the application. Additionally, he or she can advise borrowers about the type of information that is necessary to supplement the application. He or she may also be able to explain the extent of the borrower’s financial hardship to the lender. This work often helps to portray the case in the best light possible.

Drawbacks

Some loan service providers believe that the funds that clients pay for a loan modification lawyer could better be applied to paying off overdue loan payments. Additionally, some nonprofit agencies can sometimes provide legal advice regarding loan modifications. However, such agencies may be tasked with helping many people at one time, decreasing their efficiency and individualized attention. Additionally, loan service providers often have very different interests than borrowers, so relying on them can be a conflict of interest in some cases.

To help resolve financial aspects of retaining a lawyer, the attorney’s fee structure should be clear and written out. Additionally, the client should ask about making payments or paying after the contract has been restructured.

In order to find a qualified loan modification lawyer, borrowers should find someone with experience in this area. They should also ask for references so that they can learn about former clients’ experiences with the attorney.

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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer.

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