Michael E. Byczek, Attorney at Law

A common scenario faced by residential homeowners is when a home's value drops significantly compared to the amount owed on a mortgage.

When you sell the property, the bank wants the full mortgage amount paid off regardless of selling price. The homeowner will have to pay the difference, or face a possible lawsuit by the bank.

Mortgage Renegotiation

Communication and negotiation with your bank to reduce the original amount of the mortgage based upon current market values (may require at least one formal appraisal of the property).

Gather the necessary information about your property and mortgage to locate comparable properties. Communicate with the bank to negotiate a possible reduction in the mortgage amount to reflect the actual value of the property.

It is the bank's sole discretion whether to modify the loan amount.

Short Sale

Communication and negotiation with bank to approve the sale of your property if the final sale price is less than the original amount of the mortgage. Otherwise, the owner is required to pay the difference. (May require at least one formal appraisal of the property).

Gather the necessary information about your property and mortgage. Communicate with the bank to notify them that the owner is trying to sell the property based upon current market conditions. The goal is for the bank to approve a short sale, which means the sale price is less than the mortgage balance.

It is the bank's sole discretion whether to waive the remaining balance or require payment in full at time of closing.