Home loan modifications have been a really big deal the last few years. The reality, however, is that the number of actual successful modifications is far less than originally “promised” by politicians, lenders and others involved in the process. Tales of lost documents, months-long delays, and then denials abound. Given that, is it necessary or advisable to hire a lawyer to guide you through the process of trying to get a modification to your home loan? Of course, opinions will vary from lawyer to lawyer, but with some exceptions discussed below, it usually is not necessary. Many lawyers, particularly real estate or bankruptcy lawyers, have advertised their services (some heavily) for guiding you through the process. However, for the most part, you are just paying for the lawyer’s staff to do the leg work of gathering and submitting the documents for you. You will still have to get the same information, and submit it to the lawyer’s staff, who will then submit it to the lender’s account representative. This part of the process is usually of little or no value to you, and the law firm’s involvement will not give you a greater chance of getting approved. Meanwhile, you are out the fee for something that you could probably do yourself with legwork and patience, and you are getting second-hand information through the lawyer’s staff. Now, there are some exceptions…
The most important exception is that you should definitely see a lawyer if a foreclosure is imminent. In Georgia, that means that you have received notice that a foreclosure has been scheduled for the first Tuesday of the following month. The fact that you have applied for a modification, or are discussing one with your lender will not stop a foreclosure!! Never, ever accept the word of the lender’s representative that they will put off the foreclosure! It is meaningless, and when your house is gone it is gone in Georgia. In addition, do not wait until the last minute – meet with a Bankruptcy lawyer or two at least 3-4 weeks before the foreclosure date so you are prepared.
A second exception is that a loan modification is an important contract that obligates you to pay a large amount of money, secured by your home. It is just as important as the original purchase of the home, and it is important you understand the terms of the contract. Therefore, it is almost always worth the relatively modest expense of having a lawyer (usually a real estate lawyer) do a quick review of the final set of documents before you sign. Since the documents are usually standard forms, a lawyer who is used to reviewing them can quickly spot the important terms and warn you of any dangers, such as increases in interest rates, escalating payments or balloon payments. You will want to make sure you understand the deal you are making, and make sure you can make the payments, since your chances of getting another modification after a default are far less likely.