One of the more common questions that people have asked me over the last year or two is “do you think I need a lawyer?”
The question almost invariably arises when someone is considering a loan modification, short sale or foreclosure as something that will be in their future.
And as usual, my answer mostly has been — It depends.
More than anything else — in my opinion — whether or not you choose to hire a lawyer to provide legal advice primarily depends on the following:
- How much and what kind of potential deficiency risk you have
- What kind of estate planning and personal assets you have
- What kind of effort you are personally willing to put into getting to a resolution
Each personal situation is different and each lender is different, so this is by no means a conclusive list – just a general guide to go by.
Potential Deficiency Risks
According to Arizona laws, there are statutes that are commonly referred to as “anti-deficiency statutes” and they are the legal definition of what a lender can or can not do should a mortgage debt go delinquent or be settled for less than owed.
And as with any other part of the law, there are quite a few different situations that could have very different risks. So if you are unaware of what kinds of potential deficiency risks your particular situation entails…
You may want to hire a lawyer.
Estate Planning and Personal Assets
Do you have an estate plan? Is your home held in a trust, a family partnership, an LLC? Is the property an investment property? While these things usually don’t spell out specific additional risks or problems – they are simply an indicator of complexity. And the more complexity to your particular situation, the bigger the chance of something not going as expected.
They are also an indication of personal wealth. And in the event of something going not as expected and should something happen such as a bank suddenly suing you for the difference between what you sold your house for and what was owed on the note – I have found that lawyers rarely sue people who do not have deep pockets.
So if you have an estate plan or have significant assets…
You may want to hire a lawyer.
Time: The Personal Investment
If you find yourself considering a loan modification, short sale or foreclosure – one thing is certain: it will take a large amount of your time over a prolonged period.
If you find yourself in the situation where you want to trade money for time…
You might want to hire a lawyer.
Now. Having written before about loan modification lawyers, loan modification companies and whatever-else I have said — here is what I personally did when I found myself in the situation where it was time for me to end up with some kind of loan modification/short sale/foreclosure resolution…
I hired a lawyer.
And I went out and got the best group on the business to help me.
Because I learned long ago…
There is nothing more expensive than cheap legal advice.
About the Author:Justin McHood calls himself a “Mortgage Commentator” and works for Academy Mortgage Corporation. You can find his loan officers at Ten Day Close and read more of his thoughts on the mortgage business on Zillow’s Mortgages Unzipped Blog. You can also find him at most East Valley Friday Nights gatherings. He’s the one in the blue shirt.
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