When you miss making payments on your mortgage the lender has the right to engage a debt recovery process, especially when your loan goes into default. This may end up in a mortgagee sale situation. Anyone facing a mortgagee sale should seek legal guidance from a suitably qualified professional, like a lawyer, throughout this process. But, is legal advice necessary or is it just another way to lose much-needed cash?

Are there any benefits from seeking legal advice when facing a mortgagee sale?

Read on and find out.

When is it the right time to get legal help

No one wants to engage in a payment battle with a lender. However, financial ups and downs are not uncommon. When you miss making mortgage payments for about 90 days, the mortgagee (or lender) is likely to issue you with a letter of demand. In this letter, the lender will indicate the outstanding amount, including interests, any fees, and penalties that have accrued, and set a deadline date by which payment should be made.

It is a good idea to reach out to a suitably qualified legal professional when you receive such a letter. This is the first step in the formal debt recovery process.

But what kind of help can you get from a lawyer?

Reaching out to a lawyer is not in vain, neither is it a waste of money.  when you need it the most. Here are some of the benefits you will gain when you do so.

A Lawyer Will Help You Understand the Mortgage Contract Intricately

Mortgage contracts are often complex and involve various laws. When you seek legal advice from an expert, he or she will go through the contract, plus any other communication that you’ve had with the bank. They will help you to understand your rights and obligations, as well as the lender. They will also help you to understand the applicable laws that govern the administration of the loan as well as formal debt recovery.

Since most lenders have competent legal departments, they are often meticulous to ensure that they don’t breach as this could be probable grounds for action. Professional legal guidance is likely to help you to focus on the right direction – alternative solutions for mortgage rescue.

Help in Negotiating Alternative Solutions

When you fail to pay the mortgage according to the terms laid out in the contract, you are in breach of the contract. A lender has the right to a mortgagee sale. However, this is not the only solution available for them to recover the debt.

Chances are high that the mortgagee would be open to alternative solutions including:

• Reviewing the mortgage structure to lower the payments by extending the loan term. (A lender is not obliged to accept. However, a lawyer can help you negotiate for it and represent you at the table.)
• Refinancing with an alternative lender.

Inform You How to and Help Negotiate to Mitigate Losses 

If there’s no breakthrough in finding an alternative solution, and the lender is still pushing forward with the debt recovery procedures, a lawyer can give you information and help you mitigate losses. This is often by way of negotiating with the lender to allow you to sell the property without the stigma of a mortgagee sale.

This is often seen as a better option, and in some cases, it fetches a better price for the property.

Receiving a good price puts you in a better position to clear the debt and avoid being in debt post the mortgagee sale.

Ensure that the lender plays by the rules

During all these negotiations and discussions with the lender on debt recovery, the lawyer will help you ensure that the lender plays by the rules. This includes giving you rightful notice, ample time, they do not mistreat you, and they follow the right channels to ensure the property gets the “best price.”

If the lender is found to have breached some of the rules, the lawyer will advise you accordingly