Attorneys for Commercial Loan Modification. What You Need to Know.

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Commercial real estate owners who are considering hiring an attorney to handle their commercial loan modification should investigate the background and experience of the person they hiring so that they know in advance what to expect.

In my experience as a commercial loan modification specialist I have found that many attorneys who advertise themselves as commercial loan modification attorneys actually have very little experience performing successful loan workouts. Unfortunately, as many people know, there is an over supply of attorneys in the United States. This forces many lawyers to follow the latest and hottest trends in order to get new business and survive. You may see the same people who used to do accident and injury work now advertising their services as loss mitigation specialists because it has become such a needed service. For this reason the commercial real estate owner should definitely do their homework and research the actual experience of the person they are hiring.

What You Should Expect from a Commercial Loan Modification Attorney:

  1. A Money Back Guarantee: Is your attorney willing to give a complete refund if he or she is unable to successfully modify your commercial mortgage?  Very few commercial loan workout companies are offering a money back guarantee but it is will worth the research to find a company or attorney that is willing to offer a written money back guarantee if they are unable to modify your loan.
  2. A Written Plan or Proposal:  Make sure that your commercial loan workout attorney gives you a very detailed written proposal of all of the services that he or she is going to perform on your behalf.  Commercial loan modification can be a complicated process that requires many hours of work and research.
  3. Satisfied Clients. Ask your commercial loan modification attorney if they can give you the contact information for any clients that they have successfully helped to modify their commercial loans.  They may not be able to give you any references because of their privacy policy or because of attorney client privilege but it can’t hurt to ask.  An attorney who successfully modified the commercial loans of many clients surely must have one or two who would agree to attest to the experience and results that had with the attorney who helped them.
  4. Who Does the Work? Find out if your commercial loan modification attorney will be doing the negotiating and processing him or her self.  Many attorneys are too busy to actually perform the important work themselves and they may be outsourcing your commercial loan modification to a third party.  You may be able to save money and time by cutting out the middleman and going directly to the company that performs the negotiation and works with the bank.

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  1. Is there any recourse on commercial or residential loan modifications if a lawyer can’t get it done, but took your money up front? Any laws out there to protect people who may have gotten screwed?

  2. Residential you have better chance since the laws are geared toward the consumer Commercial you can also go to FTC or AG but no one weeps for an apartment owner who can’t make the note and got screwed.

    The best thing is if you payed by CC request a chargeback and let your credit card company go after them.

    Also let them know if they stuck it to you that you will find out where they eat (i.e. where they troll for clients) and will let everyone know how they treated you.

    The good thing is many loan mod firms are under fire and state AG offices are going after them so chances are if you say “boo” they may flinch and do the refund.

    I’m in the trenches every day as an investor, someone who had to do their own loan mods after hurricane Katrina wiped out our development business and as an owner of a residential and commercial mod firm that was born out of those experiences so I hope that helps.

  3. If you are going to work with a loan modification attorney, there are several steps you need to take.
    First of all, be wary of any upfront fees. Even if they have a money back guarantee, there is really no actual way of knowing if you will get some or even any of your money back. In California it is now illegal for an attorney to accept upfront fees and they can only collect once as services are rendered.
    Second, check with your state’s Legal Bar to make sure the attorney you are going to hire is in good standing with them and is not under investigation for unethical practices. Again, in California the state Bar has released names of 16 attorneys under investigation for their loan mod practices. Check with your state to see if they have something similar.
    Third, if you are doing business with a loan modification company, make sure they are contracted with an attorney. Attorneys have legal means of slowing or even stopping the foreclosure process while negotiating a loan modification, as well as experience in dealing with lenders. Also check with the Better Business Bureau to make sure there are no complaints about fraud with the company you are dealing with.

  4. In the context of obtaining a guarantee as to any result on any loan modification (commercial or residential) where an attorney is responsible for the services performed, most state bar associations that have adopted the Code of Professional Responsibility prohibit a licensed attorney from providing his/her client with any guaranteed result.
    So an attorney who does give you a guaranty as to any result may well be committing an ethical violation subjecting that attorney to discipline by the state bar of the state(s) in which that attorney is licensed. That said, you should most definitely do your whatever due diligence you feel is necessary before you retain/hire anyone including an attorney to represent you in a loan modification (residential or commercial). Even if they have credentials that check out, find out who will be doing the work on your file–the 20+ year veteran you had your consult with or one of his/her “associates” who may be 3 months post bar examination etc. Also ask the professional what type of result can you reasonable expect, assuming all of the financial information you have provided is complete, accurate and truthful (validated by copies of bank statements etc, tax returns, financial statements as well as any non-financial hardship related items. There is a significant amount of work that goes into a non-HAMP modification. Find out if what you expect is reasonable from the professional before you make a decision to go forward. All of the essential elements of what the professional is going to do for you should be spelled out in a written agreement.
    To expect a refund because the professional did not get you all of what you wanted after full pror written disclosure is not realistic so long as the work done can be substantiated. If you have hired a scam artist, yes you should get a refund, but how realistic is that? —without reporting such conduct to regulatory agencies or even filing suit against them–not a good prognosis in that context.

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