It’s a bad economy and we all know it. Florida real estate attorneys are particularly aware of tightened belts and downsizing lifestyles as more and more people have come to us not to buy real estate but to deal with real estate problems: foreclosures, real estate fraud, bad debt collection practices on mortgages, and things like that have come to be part of a Florida real estate lawyers’ daily life. It’s sad but true: and in 2011, more than ever before, short sales and home loan modifications have been a hot topic. Mortgage loan modifications, after all, have been pushed by the Florida Supreme Court as well as the federal government as a way to resolve things: many Florida home owners like the idea of modifying their mortgage to avoid foreclosure.
But do you need a lawyer to modify a mortgage? Is an attorney really necessary to get a home loan modification negotiated with your lender or bank?
First things first, no one is going to make you hire a lawyer: it’s your choice. Many may think that since they bought their home or condo without the need of a Florida real estate lawyer at closing, then why bother with the expense of attorneys fees when re-negotiating that deal? There’s no law that requires it.
There will be many different voices seemingly discouraging the need for a home owner seeking a mortgage loan modification to have a lawyer on board:
- The banks themselves offer free advice to borrowers: Bank of America has an entire web site dedicated to “Home Loan Assistance”, for example.
- Federal programs like HAMP and HARP have lots of instructional information.
- State programs are offered in convenient locations to provide guidance, like the Urban League of Broward County.
Moreover, you can find tons of web sites where real estate brokers and real estate agents provide web site advice on how to get a mortgage loan modification done. No need to pay a lawyer! These real estate pros argue that they deal in real estate exclusively, it’s their job after all, and they are more than willing and able to help home owners get that loan modification with the bank finalized.
You’ll also discover freebies online for all sorts of things, like forms for home loan modification hardship letters and relatively inexpensive checklists for loan modification negotiations. Not from lawyers licensed to practice in your state and experienced in real estate law there, but from other members of the real estate industry or legal document warehouses that may be offering this stuff to readers with the best of intentions. (Or maybe not.) You’ll find companies that have been established solely to act as the go-between in mortgage negotiations with banks and their borrowers. These usually have a 1-800 number and may or may not be located anywhere near the bank or the property itself.
Keep the Eye on the Ball: It’s a Mortgage and You’re David the Home Owner Fighting Goliath the Mortgage Lender Bank
So much advice and counsel from so many. About what? About a legal contract that may be the biggest legal agreement that borrower has ever made, or ever will make: to pay a significant amount of money for 25 or 30 years to an institutional concern governed by both state and federal laws and regulations.
It’s a big deal. Investopedia defines a mortgage as:
A debt instrument that is secured by the collateral of specified real estate property and that the borrower is obliged to pay back with a predetermined set of payments. Mortgages are used by individuals and businesses to make large purchases of real estate without paying the entire value of the purchase up front. Mortgages are also known as “liens against property” or “claims on property.”
In a residential mortgage, a home buyer pledges his or her house to the bank. The bank has a claim on the house should the home buyer default on paying the mortgage. In the case of a foreclosure, the bank may evict the home’s tenants and sell the house, using the income from the sale to clear the mortgage debt.
Think about this. You’re going to play ball in a really, really important negotiation that impacts your financial future as well as your family’s lifestyle for years to come.
Even if the most benign of situations, having a lawyer to assist you in negotiating these legalities might be helpful to you. That would be true if we had never experienced this housing crisis with all its foreclosure fraud. The reality is that things are a big, fat mess right now and nothing is benign or simple right now in real estate transactions.
In the current Wild Wild West of Real Estate Law, with new examples of fraud popping up everywhere and banks proving themselves time and again of being less than borrower-friendly (and this is being very kind) at the minimum and downright criminal at the maximum, wouldn’t the question be why someone would not have a lawyer on their side when trying to iron out a new mortgage deal with their bank?
- Different state agencies provide warnings and advice on home loan modifications, including the California Attorney General and the New Jersey Department of Banking and Insurance.
- The Florida Attorney General is investigating a record-breaking number of complaints regarding home loan modification scams.
Florida real estate lawyers who practice routinely in the representation of clients facing foreclosure, sitting on underwater mortgages and wondering what to do, getting bills for higher insurance or property taxes, trying to short sale, or just trying to get the bank to modify their home loan, know all too well that no two bankers have the same set of standards in dealing with these issues and importantly, that new laws and regulations are being written all the time for these situations.
Without having a lawyer who is savvy to the realities of today’s real estate financial mess, the mortgage borrower trying to negotiate new terms for his home loan is like prey trying to maneuver safely through a jungle of predators. Consider this warning posted by the New Jersey banking regulators:
A recent development in the ongoing mortgage and foreclosure crisis is the emergence of a new type of business which purports to offer “loss mitigation consulting,” “foreclosure prevention,” “mortgage loan modification,” and similar services. The Department of Banking and Insurance has seen an increasing number of advertisements, direct-mail solicitations and other marketing materials offering New Jersey consumers assistance in negotiating resolutions of their delinquent residential mortgage loans with lenders and servicers in exchange for up-front fees.
The Department has also seen solicitations to licensees and to attorneys to partner with companies that purport to offer such services. These marketing materials suggest that these businesses will help delinquent borrowers obtain payment plans, loan modifications, short sales and deeds in lieu of foreclosure. Mortgage bankers, brokers and solicitors have been targeted by these businesses in hopes of obtaining referrals.
Larry Tolchinsky’s Tip:
You can do lots of things for yourself in fighting foreclosures and modifying mortgages and more power to every Florida home owner who has the strength and savvy to do so. Gather your financial documents together, research your community, surf the web for all the information you can find. We think this is a great idea: heck, that’s one of the reasons for this blog.
However, we would suggest that investigating a Florida lawyer is part and parcel of doing all you can do for yourself and your family in negotiation a loan modification. Experienced Florida real estate attorneys these days, like our law firm, offer reasonable rates and work with clients on financial situations. The assumption that lawyers simply cost too much is not valid.
Furthermore, the extent of involvement of a Florida real estate attorney in your case may not be the same as for another home owner negotiating their mortgage modification for a home just down the street from you. It’s the Wild Wild West, remember? Different banks mean different approaches and different requirements. Different kinds of mortgages, ditto.
You may be protected with an hour or two spent meeting with a Florida real estate attorney, just to go over things before you move forward with the lender. You may discover that you have big defenses that warrant the Florida lawyer becoming more involved in discussions with the bank. New laws or regulations that have passed or are on the runway to be passed in the State Legislature or in Congress (as well as pending cases before state and federal courts) may impact on your timing and what you offer.
Bottom line, no – you don’t have to have a lawyer to negotiate a mortgage modification with your lender. But you really ought to think about it before you move forward without legal counsel in these Wild West days.
Do you have questions or comments? Then please feel free to Chat with Larry in the comments below, at firstname.lastname@example.org, or (954) 458-8655. If you have a specific situation, please call or email Larry because he can’t answer specific fact questions in general comments. He’s happy to take your call.