Should I Hire a Foreclosure Attorney?

How Does Foreclosure Work?

Foreclosures typically fall into one of two categories, depending on state laws:

• Judicial: The lender must file a lawsuit through the state court system, which allows the homeowner to respond and fight the foreclosure.
• Nonjudicial: This type of foreclosure does not require the lender to secure a judge's approval. Instead, the lender follows a foreclosure procedure that includes providing written notices and selling the home at public auction. That means you'll need to file your own lawsuit to get the courts involved.

In either case, a foreclosure attorney could be a valuable resource.

What Do Foreclosure Attorneys Do?

A foreclosure attorney handles the legal aspects of a foreclosure, which can include:

• Catching lender errors that could strengthen your case: For example, your monthly mortgage payment may be incorrect due to a mistake on the lender's part. Or you might discover that the lender isn't complying with foreclosure procedure requirements.
• Advising you on your legal rights and options: The right foreclosure attorney can lay out your options and put together a strong argument on your behalf. In some cases, they might advise modifying your loan or filing for bankruptcy.
• Filing court documents: This can be hard for the average homeowner to figure out, especially if you have a complicated case. Failing to do things correctly could result in losing your home.

The more information a foreclosure attorney has, the better. You can make their job easier by gathering your loan paperwork and all communication records from the mortgage company. Even if you don't have a strong case, they can still help you understand the process and advise you on your options.

When Does It Make Sense to Hire a Foreclosure Attorney?

Seeking professional legal advice might be worthwhile if:

• You think you have a strong defense to fight the foreclosure. This may be the case if you suspect that the lender hasn't followed proper foreclosure practices—or made mistakes with your account that led to an unwarranted foreclosure. An attorney can identify these things and put muscle behind your response.
• You want to keep your home but your legal options are limited. Even if your lender did everything correctly and your chances of mounting a legal defense are slim, an attorney might still allow you to avoid a foreclosure by helping you negotiate with your lender. That might involve loan modification.
• You have a government-insured loan. If you have an FHA loan guaranteed by the Federal Housing Administration, it may be easier to bring your mortgage back into good standing—thanks to repayment plans for past-due mortgage payments and forbearance options to temporarily pause or reduce your regular monthly payment. Other government-backed loans offer similar assistance.
• You're a veteran or active military service member. Per the Servicemembers Civil Relief Act (SCRA), your lender must get a court order to foreclose on your home if you finalized your mortgage before joining the military. You might also qualify for a reduced interest rate on your current mortgage or a refinance loan.

When You Might Not Need a Foreclosure Attorney

Not all foreclosure cases require the help of an attorney. You might choose to go it alone if:

• You don't want to keep your home. Your goal may be to ride out the foreclosure, accept the financial consequences and settle into a new home once the dust settles. Just be aware that if you're facing a judicial foreclosure, you'll still need to file legal documents with the courts.
• Your options are limited. An initial consultation with a foreclosure attorney might confirm that you don't have much of a case. If you have no grounds to fight the foreclosure, you can likely manage things on your own.

How Much Does a Foreclosure Attorney Cost?

Legal costs can vary based on the attorney's fee structure, the complexity of your case and whether you go to trial. Attorneys typically charge in one of the following ways:

• Requiring a retainer: This is when you pay upfront for a specified number of hours. As you move through the process, you may have to add more if additional work is required. Hourly rates typically range from $100 to $500, according to Nolo.
• Charging a flat fee to handle your foreclosure: This can range from $1,500 to upwards of $5,000.

Covering legal costs might be difficult if you're already behind on your mortgage payments. Before contacting an attorney, consider getting free advice from a Housing and Urban Development (HUD) counselor. They can review your situation and goals, look at your finances and help you create an action plan for moving forward with your lender.

How Can I Find a Foreclosure Attorney Near Me?

A HUD counselor can point you toward free or low-cost legal services in your state, and the American Bar Association offers free virtual support to low-income homeowners. You can also search for credentialed foreclosure attorneys through your state bar association website. Another option is to search online for reputable attorneys who specialize in foreclosure and have strong client reviews.

Once you've narrowed down your list, schedule consultations to see who feels like the best fit. Be clear about your expectations and come with the facts in hand. Also share any specific questions you may have.

How Does a Foreclosure Affect Your Credit?

A foreclosure will negatively impact your credit and stay on your credit reports for seven years. In general, those who have a higher credit score before a foreclosure usually experience the biggest drop afterward. That might make lenders hesitant to work with you in the future—especially mortgage lenders. A foreclosure is right behind bankruptcy in terms of serious negative credit events. The best-case scenario is to stop a foreclosure or prevent it altogether.

If it's unavoidable, it's possible to rebuild your credit over time. Just be patient as it could take years to see a real difference.

Here are a few tips for repairing your credit after a foreclosure:

• Pay your bills on time
• Stick to your budget
• Get a secured credit card
• Keep your credit utilization ratio low
• Check your credit score and credit reports regularly
• Pursue credit counseling if necessary

Can I Modify My Mortgage Loan?

Your lender may be willing to work with you to prevent a foreclosure. Consider reaching out and explaining your situation—especially if you've fallen on hard times financially. A mortgage modification may be on the table, which could reduce your monthly payments by extending your loan term. You'll pay more in the long run, but it might be the best way to keep your home and avoid foreclosure. Another option could involve setting up a payment plan to pay back missed mortgage payments.

Just keep in mind that not all mortgage lenders offer loan modification. Alternatively, you might choose to refinance your loan or convert an adjustable-rate mortgage (ARM) to a fixed-rate mortgage. You might also consider one of the following:

• Chapter 13 bankruptcy: This type of bankruptcy can allow you to retain your home and other assets and create a payment plan to catch up with creditors over several years. The downside is that Chapter 13 bankruptcy will stay on your credit reports for seven years—and could reduce your credit score by up to 200 points.
• Deed in lieu of foreclosure: With this option, you'll avoid foreclosure by forfeiting the property to your lender. Your mortgage loan will then be closed, but your credit will take a substantial hit. Your lender may decline a deed in lieu of foreclosure if there are liens or judgments on the home or the property is in poor condition.
• Short sale: A short sale, which is usually less damaging to your credit than a foreclosure, involves selling your home for less than what you owe on your mortgage. From there, your lender may require you to pay the difference between the sale price and your outstanding loan balance, or they might forgive it altogether.

Frequently Asked Questions

The Bottom Line

Navigating a foreclosure can be a stressful and time-consuming process that is ultimately likely to cost you your home. Having a foreclosure attorney in your corner can provide peace of mind and give you the best chance of keeping your property. But if you don't have grounds to fight the foreclosure and don't want to stay in the home, an attorney may not be necessary.