Even in situations where you know foreclosure is inevitable, having an attorney can assist you with other goals like minimizing the damage to your credit score or negotiating foreclosure alternatives with the bank. But before you hire a foreclosure attorney, you need to be aware that it can get expensive. In this article, we’ll explain how these legal fees and costs work and what you should expect if you hire legal counsel for your foreclosure action.
Written by Attorney Curtis Lee.
Updated October 11, 2021
Missing mortgage payments and dealing with foreclosure is stressful. You’re not only facing a financial crisis, but you’re also facing the prospect of losing your home. Given what’s at stake, you might consider hiring a foreclosure lawyer.
Having an attorney will help you raise any foreclosure defenses you might have against the mortgage loan company. Even in situations where you know foreclosure is inevitable, having an attorney can assist you with other goals like minimizing the damage to your credit score or negotiating foreclosure alternatives with the bank. But before you hire a foreclosure attorney, you need to be aware that it can get expensive. In this article, we’ll explain how these legal fees and costs work and what you should expect if you hire legal counsel for your foreclosure action.
Why Hire a Foreclosure Lawyer?
Depending on the terms of your mortgage and where the foreclosed real estate is located, the foreclosure process can be either judicial or nonjudicial. Regardless of which type of foreclosure applies to your case, there are several reasons to consider hiring a foreclosure lawyer.
Foreclosure laws are complicated.
First, your foreclosure rights can be complicated. And there are numerous laws and regulations that may be applicable. For example, a federal regulation from the Consumer Financial Protection Bureau restricts the use of dual tracking. Dual tracking occurs when a mortgage loan servicer forecloses on a home at the same time that they’re working with the homeowner to prevent foreclosure, such as through the use of loss mitigation. If your servicer is dual tracing, they may be breaking the law.
Also, you’ll have the right of redemption, but these laws vary by state. Then there’s the fact that these laws are constantly changing. This was especially true during the coronavirus pandemic when Congress passed a series of laws to protect homeowners and tenants from evictions and foreclosures.
The foreclosure process can be complicated.
Second, moving through the foreclosure process is complicated. If you’re in a judicial foreclosure, a foreclosure lawyer can help you with the lawsuit. This could include:
Responding to the summons and complaint
Asserting legal defenses, if applicable
Handling any motions you may want to file or responding to any motions the lender filed
Taking and responding to discovery
Representing you during court hearings and a possible trial
Even if your foreclosure is nonjudicial, an attorney can be invaluable. They can ensure the lender follows the rules for the nonjudicial foreclosure process, such as during the foreclosure sale. If they find problems, they may be able to stop or slow down the foreclosure.
Attorneys can help you negotiate with lenders.
Your attorney can also assist with loss mitigation or negotiating with lenders. For instance, you might be trying to convince a bank to accept a foreclosure alternative, like a deed in lieu of foreclosure. And if your lender makes a mistake during the foreclosure process, your attorney can use this during negotiations to get a better outcome.
A Foreclosure Lawyer’s Fees
Although there are a few exceptions, the majority of foreclosure lawyers will ask you to pay for their services. In addition to paying for their time and expertise, you’ll also have to pay for administrative costs, such as postage, copying, travel expenses, and filing fees.
But just because you need to pay for an attorney, doesn’t mean you should accept any price or rate a foreclosure lawyer gives you. It pays to familiarize yourself with how legal fees work and what the typical foreclosure attorney charges to handle your type of foreclosure. The last thing you want to do is pay more than you should or hire an attorney you can’t afford. A foreclosure attorney’s fees will vary based on:
The type of foreclosure you’re dealing with
The complexity of your case and your legal defenses
The type of law firm the attorney works for
Where the foreclosure is taking place
The attorney’s fee structure
It will also depend on what you’re trying to accomplish with your foreclosure. For instance, are you trying to stop it to save your home or just delay the lender until you can find a buyer? All that being said, foreclosure attorneys can charge anywhere from $1,500 to $20,000 to represent borrowers in a foreclosure proceeding.
Unlike many other professions, there are a lot of variations in how an attorney charges for their work. The two major fee structures are the hourly rate and the flat fee. Then there are hybrid arrangements where the fee is some combination of the hourly rate or flat fee. Lawyers can also get paid with a contingency fee, but these aren’t common for foreclosure attorneys.
Many foreclosure lawyers representing homeowners will have a fee structure based on either the hourly rate, flat fee, or monthly rate. These have their fair share of benefits and drawbacks, so the best fee structure will depend on your particular needs.
Regardless of which method they use, many attorneys will require clients to pay a retainer fee. This is an initial deposit to the attorney to prepay for some or all of their services. The attorney will keep the money in a trust account (kind of like holding it in escrow), then withdraw the money as they complete work for the client’s case.
An hourly rate fee structure requires you to pay your attorney based on how much time they spend on your case. The more time they spend, the more money you pay them. Most attorneys keep track of their time in six-minute increments and always round up.
The hourly rate will depend on the attorney’s skills, experience, and the going rate in the local legal market. As you might imagine, the more experience or skills an attorney has, the higher their billing rate will be. And an attorney working in a location with a high cost of living will also charge more for the same work than someone working in an area where it’s less expensive to live. You can expect the typical foreclosure lawyer to charge anywhere from $100 per hour to as much as $500 per hour.
The biggest advantage of hourly billing is that you’ll likely get your attorney’s best work, no matter how long your case takes. The biggest disadvantage is that it’s difficult to predict the total cost of your legal representation.
Instead of charging you based on time, flat-fee arrangements are based on the type of job. Depending on the facts of your case, the flat fee to handle a foreclosure could range from $1,500 to $4,000.
The primary benefit of a flat-fee arrangement is that you’ll know from the start how much it’ll cost to hire an attorney. Additionally, your attorney has a strong motivation to work as efficiently as possible. The biggest drawback is if your attorney underestimates the amount of time and effort it takes to handle your case. Then you risk your attorney looking for ways to reduce the work they do for you.
The monthly fee billing format is a combination of the hourly and flat-fee arrangements. The more months it takes to handle your case, the more you pay. But you pay a flat rate each month no matter how much or how little work your attorney puts in. One of the advantages of a monthly rate is that you know what your legal bill will be each month. But the disadvantage is that you pay your attorney each month regardless of how much work they do. Also, the longer your case goes, the more your attorney will cost.
What if You Can’t Afford To Pay Attorney’s Fees?
When you’re facing the threat of losing your home due to foreclosure, you may not have several thousand dollars available to hire an attorney. Many borrowers are in the same situation as you, so there are ways to handle a foreclosure on your own. Luckily, there are various foreclosure resources to help homeowners handling foreclosure on their own. Some options include:
Paying for one or two consultations with an attorney to get an idea of what your legal options are and how to take the next few steps in your foreclosure action.
Using online tools and resources to learn about foreclosure law.
Seeking assistance from nonprofit organizations that offer help to families on financial matters.
Contacting a bar association, legal aid clinic, or other attorney-based organization. You can ask if they have any attorneys that can represent you on a pro bono basis (for free) or to help you find a foreclosure law firm with lower attorney’s fees.
You’re not required to hire an attorney to handle your foreclosure case, but it often helps to have one. A foreclosure lawyer will not only help you understand relevant complicated legal information, but they’ll also navigate the litigation or foreclosure avoidance process on your behalf.
The vast majority of foreclosure defense attorneys will ask you to pay for their services. How much these attorneys charge will depend on many factors, including what kind of billing arrangement they use. If you can’t afford to hire an attorney, there are a few other options for you to get legal assistance to help you through your foreclosure.