When Do You Need an Attorney?

By Andrew J Thompson

When a bank or your lender threaten you with foreclosure, it can get very uncomfortable in a hurry.  I’ve represented dozens of homeowners, borrowers and private lenders in mortgage protection and mortgage fraud cases, very few of whom have hired me in the early stages following a claimed default.  Usually, they don’t need to at this stage.  But that can change in a hurry and it can change with profound implications.

If you hire an attorney before you have the need for legal defense, you will expend badly needed financial resources trying to protect against claims that aren’t yet ripe.  But if you wait too long, the consequences can be dire.  In my experience, I have learned that I can help just about any homeowner if they come to me early enough.  But I have also had plenty of cases where it’s too late, or there just aren’t the resources at hand to defend the case in the way it needs defended. So how exactly does this play out, and what are the factors that dictate when an attorney can and should make a difference in your case?  Below is a summary of what is likely to happen at various stages of proceedings and how it is that an attorney should help, or alternatively may not or may not be able to help  under the circumstances.

DEFAULT/PRE-FORECLOSURE

Until the bank has indicated it intends to move ahead with foreclosure proceedings, you generally do not need an attorney working for you.  If you are considering a loan modification, or have applied for one, you know there is much paperwork involved, and hiring an attorney will usually do little for you except increase the cost of defending yourself.

There are exceptions, however.  If your claims against the lender are so clear that you have a suit to file against it (them), then you should hire an attorney sooner rather than later to pursue your rights, rather than sleeping on them until the bank establishes the upper hand against you.  Pre-emptive strikes can be very important in foreclosure litigation because the lender often takes advantage of the procedural tools (Trial Rules) at its disposal that enable it to move quickly and short circuit your rights of defense against foreclosure.  I have seen this happen to an unsuspecting homeowner many times over, so don’t let it happen to you.

NOTICE OF INTENT TO FORECLOSE

At this juncture, before a case is filed against you, but upon seeing a pre-foreclosure intent letter, it is wise at least to consult with an attorney to know your rights and help you decide on your own next steps, while wisely considering what to do more immediately.  Most typically I would say this is generally too early to hire counsel, and any earlier makes little sense except in the situation where you need to find an attorney to prosecute your own claims against the lender,

RECEIVING A SUMMONS

If things ever get to this point, it is time to hire counsel and to be as aggressive as you can defending your rights – whether as to ownership of the property, for a proper accounting of the loan, or otherwise.  The Summons means this is serious buisness.  You’ve been sued!  But chances are very high that if you use the special rules to your advantage.  You should not try to Answer a Complaint on your own, and you should not to begin staging a defense to the suit without the assistance  of counsel.

SETTLEMENT CONFERENCES/MEDIATION

In some ways the structure of a settlement conference lends itself to handling it without the aid of counsel, but the problem is the lender will take advantage of the rules if you don’t have someone on your side who knows what to look for.

POST-JUDGMENT PROCEEDINGS

Whether   it’s Default, Summary Judgment, or even a judgment at trial – in a foreclosure proceeding, the bank is going to want to  get the property sold and you out of the house – probably as soon as it can.  While it’s too late usually at this stage to make a difference, an effective attorney may still be able to employ a strategy that will buy considerable time in your favor.

All things considered, don’t delay.  There are so many good, viable defenses to a foreclosure action available to you, make use of them in the best way you can.  If you’d like the opinion of a seasoned experience mortgage defense attorney or may need actual representation, please call (317) 564-4976 to set an appointment speak with the author.

Why Loan Modifications Don’t (Usually) Work

By Andrew J Thompson

The only thing that can help most homeowners who are behind on mortgage payments, is a reduction in their monthly payment.   Loan modifications don’t often work out because the programs created by banks and HAMP – the federal government’s “Home Affordable Mortgage Program” –  do not allow enough flexibility for homeowners to actually reduce their loan payments.  

This is true because the real purpose behind most of what is in the modification programs is to try to enable the banks to collect the full amount due on the loan as quickly as they can.   The banks want to do this, of course, but they want it in spite of the reality that the homeowner is only behind because he or she (or they) can’t make their current payment.  What ends up happening is that a sort of, modification “shell game” is created that the homeowner can’t win.

The lenders put the homeowner though a long process of essentially re-qualifying for a loan, at the end of which, the homeowner typically qualifies for a reduced payment of principal and interest – only to learn when the full terms are disclosed – that there is a kicker: the arrearage alleged by the lender must be repaid on a schedule that actually increases the total payment the homeowner must make.  Of course, the borrower only learns of these terms after a long, drawn out process, which has lead them to go further into default on the loan (on the expectation that they will qualify for more favorable payment terms), and leaves them in a worse position than they were before the process started.

So what is a homeowner to do?  For the most part, I believe the defaulted homeowner is better off to skip the whole loan modification process.  First of all, there may be very serious problems with the mortgage and promissory note, and it may not be necessary.  You may have more rights than you know.  In a few instances, a loan modification may work, but only when there a a few pre-conditions: 1) the creditor agrees to an arrangement during the approval process that allows you temporarily to reduce your payment, without going further into default.  Most lenders won’t do this, but if they won’t, you are not going to come out ahead in the end, and it is not a worthwhile process; 2)  any catch up arrangement for an arrearage will necessarily be structured so that the overall payment – principal , interest and the catch up – will be less than the original payment.  Otherwise, the loan modification CANNOT work.

But it is very rare to find a lender who will agree to such provisions.   yet if they don’t, the whole process is a sham – designed for failure from the outset.  If that turns out to be the case, it’s probably time to seek counsel to assist you in deciding how best to proceed.  Your rights need to be protected.  Protect them in the best way you can.

If you’d like to discuss your options with our staff, please contact our office at (877) 365-1776 toll free or (317) 564-4976, or contact the author vial email: ajt@thompsonlaw-in.com.