You May Have More Options to Avoid Foreclosure by Hiring a Lawyer

Although banks love the lawyers whose services they can buy, either as government legislators, regulators, or law firms who will lie to courts about foreclosure cases, these same lenders rarely enjoy talking to the legal representative of a homeowner. Although this seems a bit contradictory, it makes sense from the perspective of predatory banks with a lot of money that employ lawyers to justify their scams.

Homeowners facing foreclosure typically employ their own attorneys in two separate instances. The first is when borrowers attempt to defend against a foreclosure action in court by hiring a lawyer to represent or help them through the lawsuit. The second is, if there are no other options left to save the house, the homeowners decide to file for bankruptcy and hire an attorney to help them with this.

In either case, the banks do whatever they can to discourage the homeowners from seeking out legal counsel and fighting for a realistic solution to keep their properties out of foreclosure. Lenders would much rather let a house go into foreclosure and take it back quickly, knowing they can rely on government bailouts and Federal Reserve counterfeiting to keep them in business without having to help clients.

But especially in the case of defending a home in court, homeowners may be able to turn the tables on the mortgage companies. Simply by threatening to defend the lawsuit, homeowners may be able to convince the banks to begin negotiating for a more beneficial mortgage modification or other solution that will work out for the borrowers (and the banks) in the long term.

The are a number of benefits that homeowners receive by seeking out legal representation during foreclosure. First, a lawyer who is familiar with lending laws can usually find various laws or regulations the bank may have violated in the origination or servicing of the loan. Raising these issues in court during foreclosure lawsuit can severely derail the process and drag out the foreclosure for years.

Banks are willing to do almost anything to avoid having the foreclosure last for years, as this is all time that the home is under litigation, it is costing the bank in legal fees, and they are not collecting payments on the loan. In fact, this tactic can be one way for homeowners and their own lawyers to persuade the bank to offer a mortgage modification rather than going through with the foreclosure.

In terms of filing for bankruptcy, changes to the bankruptcy code in 2005 made it more time-consuming and paperwork-intensive for borrowers to discharge or reorganize their debts. Although it is still very possible for homeowners to file on their own, they may wish to hire a bankruptcy lawyer to help them with the process.

Lenders, of course, like bankruptcy just as much as they like homeowners who are defending their homes in court. Although these same lenders rely on homeowners and taxpayers to keep the entire banking system itself out of bankruptcy, they do not like when homeowners file to avoid foreclosure. Most times, they will do whatever they can, including outright lying through their own attorneys, to have the case dismissed.

This is not to say, though, that filing for bankruptcy is a great solution for homeowners facing foreclosure. In many cases, the reorganization plan under a Chapter 13 can be very expensive and will lead the borrowers right back into foreclosure once they miss a payment. Although banks know that bankruptcy will most likely fail within a few months, they still try to get the case dismissed and go right back to foreclosure.

It seems more than a little ironic that, given the banking industry's love affair with the law industry, banks would be so loathe to work with attorneys hired by homeowners in foreclosure. Obviously, the lenders believe that the law should be too expensive for the common person and instead defined and decided by those who own the lawyers, courts, and legislators; i.e., the banks themselves.

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