Do You Really Need an Attorney for a Loan Mod?

We recently wrote a post that proved quite controversial. The post, “10 Reasons You Absolutely Need an Attorney for a Loan Modification” has sparked a lively conversation on LinkedIn, and we wanted to follow up on that post with some additional commentary on our stance.

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The reason this topic is so controversial is because there are lots of loan modification and foreclosure rescue scams and what seems to be endless misconceptions about loan mods.

We know this based on a decade’s worth of foreclosure prevention experience and speaking with more than 10,000 homeowners since 2004 (yes, even before the foreclosure crisis was imagined, we were helping homeowners avoid foreclosure!).

Our mission here at The Homeowner Defense Network is to educate and empower homeowners and guide them through their possible options. We do this at no cost to the homeowner.

The controversy around this topic, though, is about using a lawyer to get a modification. Although some folks are able to get help through their banks or nonprofits, there’s many that do not and are still in need of a solution.

True, Free Help is Available

Some people go through HUD for a modification, which your lender also recommends, but it has a low success rate historically. An attorney friend of ours in California was once a HUD-approved counselor and she said that the success rate for HUD nationally was around 16% to 18%. If I marketed our programs as having a 16% success rate, people would laugh!

It’s also my understanding that a HUD counselor only helps with the paperwork. They do not aggressively negotiate your file, nor will they discover any violations or fraud within your loan. They certainly cannot provide legal advice, nor take legal action if necessary for damages or wrongful foreclosure when you don’t get approved.

HUD is free and yes who doesn’t like free? So, what’s the catch? Well nothing in life is free (meaning there is always some price you are going to pay); if it takes a day, a week, or a month longer to resolve this issue, it is costing you time, money and added stress.

Every day you fall further behind, the lender happily piles on late fees, penalties, legal fees and foreclosure fees, so its in your best interest to get the best help you can afford.

And here’s an example of a bunch of complaints on one of the largest nonprofits helping homeowners: http://naca.pissedconsumer.com/.

You Could Always Do It Yourself

For homeowners that do want to do their own modification, we recommend taking the time to thoroughly educate yourself and use our FREE loan mod tool. There are also other tools and resources that we suggest homeowners take advantage of to help them on their loan mod journey.

However, based on loan modification statistics, our conclusion is that most homeowners lack the knowledge, time, and tenacity to do their own loan mod, which ends up being a recipe for disaster because one seemingly minor mistake can cause delays, denials — or worse — a foreclosure.

Choosing a Law Firm Requires Extensive Due Diligence

The network of products and services that we put together over the past six years, literally required evaluating hundreds of companies until we found the handful of solutions that we currently endorse and recommend to homeowners. Most homeowners don’t have years to search out solutions, they typically only have months, weeks, or days, nor can they afford to make the wrong choice with their home on the line.

The Federal government banned upfront fees for loan modification companies in 2010 through the MARS Rule, but made attorneys exempt. However, there are still unreliable companies out there, which is why it is critical to have a professional third-party opinion on any product or service you are choosing.

We’ve come across companies that said they were law firms, but didn’t have attorneys in their office. We came across law firms that claimed they could get homeowners “free and clear” homes, principal reductions, loan modifications, and/or delays foreclosure sales, but couldn’t provide documentation to verify their claims nor did they have a track record of success.

In addition, we discovered that most attorneys are good with legal matters and filing lawsuits, however, loan modifications are a financial matter — so if you have a lawyer who is not an expert in both, including lender negotiations, then they are likely setting up the homeowner for failure.

So in closing, there are many options out there for homeowners to seek, but we believe we’ve found the option that gives homeowners the highest rate of success when seeking a loan modification or facing foreclosure, and that option is working with a reputable network of companies that provide solutions for homeowners based on their specific situation, and law firms that are well versed in lender negotiations, compliance and loan modification guidelines.

About Brett Robbins

Brett Robbins is the founder and CEO of The Homeowner Defense Network. The HDN offers systems that help homeowners discover what programs they may or may not qualify for and why in less than a week. The HDN also has a trusted network of mortgage relief service providers, and offers a proven credit education program.

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