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Why Hire an Attorney for Loan Modifications



The housing crisis continues unabated in many areas of the country, and distressed homeowners are scrambling to avoid foreclosure by any means necessary. To obtain more favorable mortgage loan terms, while avoiding legal problems, homeowners need to hire an attorney for loan modifications.

Foreclosures and Depressed Home Values

Through no fault of their own, many property owners are finding that the high rate of foreclosures in their area have depressed housing prices leading to loss of much or all of their homes' equity. For some, the temptation to just walk away from their loans instead of continuing to make high mortgage payments on a home worth less than the loan value is too high to resist.

Banks, however, and other lenders have too many REO properties, or those homes taken in foreclosures, and many would like to reduce the chances of taking on more foreclosed properties. By allowing loan modifications for those homeowners who wish to remain in their properties and who have the financial means to do so, banks can achieve this goal.

Retain a Loan Modification Attorney

A loan modification is simply a change in the loan or mortgage terms. To obtain a loan modification, a real estate attorney or one skilled in loan negotiations can help you by doing the following:

  • Assessing your home's current value
  • Comparing your home's value to your financial situation
  • Helping forgive overdue balances
  • Eliminating late fees
  • Lowering the principal on your loan
  • Extending the loan's duration
  • Finding a credible loan modification program

Few lenders want to take a loss from a foreclosed property, so a loan modification is usually in their best interests under many circumstances. For them, negotiating with buyers who are financially stable and can afford terms that are more consistent with the current state of the real estate market and the actual value of their homes is a viable option.

Loan Modification Programs

A loan modification attorney can also advise homeowners on applicable federal programs designed to assist distressed owners by determining if they qualify for the program and which documents are needed. Generally, you must be able to demonstrate financial hardship though still have a stable income, be delinquent in payments or face that possibility, and have a loan under a certain amount. An attorney can also monitor the progress of the loan modification application and keep the lender advised.

Hiring a lawyer for a loan modification can increase your opportunity that more favorable terms can be negotiated with the lender, or that a suitable loan modification program can be found, so that you can remain in your home and hopefully regain the equity lost while the housing market eventually regains its stability.