When it comes to foreclosure, hiring an attorney early in the process helps ensure that you have more options available to you than what might be available later in the foreclosure process. For example, a lawyer can help you work out a deal with the lender that will allow you to stay in the home, or, if necessary, fight the foreclosure in court. If you wait too long, though, it might be too late to stop the process.
When It’s Time to Get Help
If you fall far enough behind on your mortgage payments—typically more than 120 days delinquent under federal law—the lender can begin a legal process, called a foreclosure, which allows the lender to sell your home to repay the loan.
Before officially starting a foreclosure, the lender usually must, under the terms of the mortgage contract, mail you a letter (called a breach letter) putting you on notice of its intention to begin foreclosure proceedings if you don't get current on the loan. To prevent your bank from moving forward with the action, you’ll need to bring your loan current within a specified period, typically 30 days. (You can find out more about notices and other foreclosure documents in the article Understanding Foreclosures: Your Loan and Foreclosure Documents Hold the Answers.)
As soon as you receive the breach letter, it’s time to start thinking about hiring an attorney—especially if you can’t catch up on your payments and you want to keep your home. Your lawyer will have limited time to take the steps needed to defend against the proceeding. By waiting too long to hire an attorney, you could miss an important deadline. Worse yet, if the lender completes the foreclosure before you’ve secured legal representation, it will be difficult to get your home back—even if there was some legal violation during the process.
How Can an Attorney Help?
The foreclosure process is difficult to understand and master, even for an attorney. For example, court procedures vary from state to state, and even from court to court. Also, nonjudicial foreclosure procedures are vastly different in different states.
If you want to fight the foreclosure, you’ll need to understand how to file documents with the court, rules of evidence, and more. An experienced and skilled foreclosure attorney can help you navigate the rules and advise you about your various options. For example, a lawyer can help you avoid foreclosure altogether by working out a “loss mitigation” option (like a loan modification), represent you during the foreclosure action, or help you save your home in a Chapter 13 bankruptcy.
An Attorney Can Work With Your Lender to Avoid Foreclosure
If given enough time, a lawyer might be able to work out a deal with the bank to avoid foreclosure. Here are examples of ways an attorney can help that don’t involve going to court.
Help you modify your loan. A loan modification is an agreement between the borrower and the lender that changes the original terms of the loan. An attorney can assist you in the loan modification process. (Note that some states, like California, don't allow an attorney to accept payment until after the attorney has fully performed each and every service related to a modification that he or she was contracted to perform or represented that he or she would perform. Cal. Civ. Code § 2944.7.) A modification might lower the interest rate or extend the amortization term. An attorney can also review the conditions of any modification that the lender offers you. He or she will examine the documents to make sure there are no illegal charges—like improper fees or advances—added to the total balance, and that the modification is in your best interest.
Inform you about loss mitigation options. Certain types of loans, like Fair Housing Administration (FHA) loans, have special loss mitigation options that allow you to bring your balance into good standing. For example, you might qualify for a “partial claim,” which is a particular type of loan that will bring you current on the payments. However, not all lenders will let you know about every alternative that might be available to you. Your attorney can advise you about the available options.
Ensure that the lender follows the rules. Lenders aren’t always helpful when it comes to processing loan modification applications, even though federal law (and sometimes state law) has strict requirements that the lender must follow. An attorney can ensure that the lender follows all of the relevant laws and processes your application promptly. For example, under federal law, if you submit a complete loss mitigation application more than 37 days before a foreclosure sale, the servicer must consider the application and give you time to respond to a proposed option before it can ask the court for a foreclosure judgment or order of sale, or conduct a foreclosure sale. Your attorney will let you know if the lender violates any relevant laws, and can help you enforce your rights.
Represent you in foreclosure mediation. Some states offer foreclosure mediation, where the homeowner and the lender come together to try to work out an alternative to foreclosure. An attorney can represent you in the negotiation process to ensure that the bank treats you fairly.
Defenses a Lawyer Can Raise in Court
An attorney might be able to raise certain defenses or point out errors that the bank has made in the foreclosure process. Potential arguments include:
- the lender or mortgage servicer (on behalf of the lender) breached the loan contract by, for example, failing to accept your payment (read about common servicer errors)
- the foreclosing party can’t prove that it owns the mortgage debt
- you’re an active military member entitled to protection against foreclosure under the federal Servicemembers Civil Relief Act, or
- the lender failed to follow proper foreclosure procedures under state law.
If your attorney raises a legitimate defense and the court agrees with the argument, the lender might consider a settlement or the court might dismiss the foreclosure.
Help You File for Chapter 13 Bankruptcy
Filing for Chapter 13 bankruptcy can be a good solution if your lender won’t modify your loan, or if your pockets aren’t deep enough to fund an expensive legal battle. If you qualify, you can keep your house and bring your arrears current over the course of three to five years. (For more information, see Secured Claims in Chapter 13 Bankruptcy: Can I Catch Up on My House or Car Payment?)
Questions For Your Attorney
- Do I have any defenses to the foreclosure?
- How long will the foreclosure process take in my case?
- Can you help me work out an alternative to foreclosure with my lender?