Law Firms' New Role: Loan Renegotiator
The mortgage meltdown is changing the role that lawyers play in the foreclosure process.
As many complain that mortgage servicers are unwilling or unable to focus on the loan renegotiations that are needed to prevent an unprecedented number of owners from losing their homes, Fannie Mae is turning to a number of law firms to fill the bill, under a new pilot program. The private mortgage purchaser found that borrowers, once the legal process begins, are readier to do what needs to be done, and hence has begun looking to law firms to approve, on the spot, key techniques including principal reductions, changes in loan terms, short sales and simply giving the lender the deed in lieu of foreclosure, reports the Philadelphia Inquirer.
Among the law firms that have taken on this new role is Phelan Hallinan & Schmieg, a 22-attorney firm in Philadelphia’s Center City. In the past, if delinquent borrowers wanted to try to catch up, the firm could only refer them to their mortgage servicers. But now, once a staffer tells them what they owe, “If they can’t make it, we’ll start negotiating with them,” says Dan Heredia, the leader of the firm’s loss-mitigation team.
There are currently about 40 law firms in 15 states participating in Fannie Mae’s new new pilot program.
