Short Sales

Freddie Mac updated HAFA to protect borrowers who have successfully closed a short sale.  In its Mid-February Bulletin, Freddie Mac mandated that loan servicers for its loans “must waive all rights to seek deficiencies for short payoffs and deed-in-lieu of foreclosure transactions on Freddie Mac Mortgages that have closed in accordance with the Guide” (Freddie Mac February 15th Bulletin, page 1).

This is encouraging news for those who are considering a short sale to avoid foreclosure.  We have previously written about the benefits of short sales for homeowners and how homeowners can recover from short sales faster than foreclosure.  This change further cements short sales as a viable alternative to Foreclosure.

We hope that Rocky Mountain Luxury Properties can be a valuable resource for you!  Contact us by phone at (970)306-RE12 (7312) or by email at

Over the next few weeks Rocky Mountain Luxury Properties will be publishing a series of entries on Short Sales.  Our goal with this series is to help you understand a very complex short sale process.  Our belief is that we can make short sales a more viable option for homeowners in need by using our expertise to help simplify the process.

In the first installment we will define a short sale, as well as, describe the benefits of short sales to both homeowners and lenders.

What is a short sale?

A short sale is one way for homeowners to avoid foreclosure and the associated credit score penalties. In a short sale, the owner receives permission from their lender to sell their home for less than is still owed on the property. In a traditional short sale, the seller would still be responsible for the outstanding debt. In response to the housing crash in 2008, the Obama administration and the Department of Housing and Urban Development (HUD) have allowed qualified homeowners to be forgiven the difference between the selling price and what’s left on the mortgage.

Why do Banks like short sales?

Lenders prefer short sales because in many cases it can be less expensive than foreclosing on a property. When the bank chooses to foreclose they are expecting to incur extensive legal fees, property management and damage costs, and delays from the process. In addition to foreclosure being a costly process, the bank will usually sell a foreclosed property at a liquidation price. The pricing benefits of short sales is demonstrated by this recent data.  According to this study, bank owned property prices were on average 28.5% lower than non-distressed property prices, while short sale property prices were only 23% below normal prices. Furthermore, damaged bank owned properties were on average a whopping 60% below non-distressed prices.  Short-sales not only benefit homeowners by allowing them to get out from underwater, but also minimizes the lender’s loss.

That’s it for the first installment in the short sale series.  In this post, we defined a short sale; and laid out the benefits for homeowners and lenders.  In the coming editions of our short sale series we will give an overview of the six types of short sales and also provide a mock short sale package.

We hope that Rocky Mountain Luxury Properties can be a valuable resource for you!  Contact us here with any comments, questions, or even just to chat!

The law was first passed in 2007 then was extended through 2012 in 2009.  This law relieves homeowners (limited to primary residences) from having to pay taxes on the forgiven portion of their loan.

Typically the IRS would consider the forgiven loan amount income.  This has helped many homeowners who have gone or will go through the short sale process.

Congress is talking about extending this program past 2012, however, currently the deadline is December 31, 2012.  Something to keep in mind as we get further along in 2012

If you have any questions please feel free to contact Andie Ohdie by phone at (970) 306-RE12 (7312), or by email at:  If you have a smart phone, a QR-tag with Andie’s contact information is provided below.  We look forward to speaking with you!

When a homeowner is forced into foreclosure they are told that it will take up to seven years before they can qualify for a Mortgage again… if the homeowner chooses a short sale, this wait period can be waived or significantly reduced.  Not only is a short sale better for your credit, in most cases better for the lender, and a faster process than foreclosure, it also allows a homeowner to receive a  home loan faster after disposing of a distressed property.  This is another pro of negotiating a short sale instead of allowing the property to be foreclosed upon.

The reduction or waiver in loan-qualification time is not guaranteed, but depends on the characteristics of the short sale and the original loan.  For a homeowner to perform a short sale there must first be a documented hardship, such as a sudden loss of income, divorce, illness, or death in the family,  etc.  Similarly, the FHA requires a hardship for the post-short-sale waiting period to be reduced.  This should not be difficult to show given that the short sale would not have happened in the first place without such a hardship.

If you are in a position where you think you can benefit from a short-sale, then Rocky Mountain Luxury Properties wants to be a resource as you move through this confusing process. We have a proven expertise with the short sale process that we want to share with you!

For more information please contact Andie Ohde by phone at (970) 306-RE12 (7312), or by email at:  If you have a smart phone, a QR-tag with Andie’s contact information is provided below.  We look forward to speaking with you!

Understanding short sales is vital to being a major player in the growing foreclosure market.  Eagle county saw a 20% increase in foreclosures over January 2011, Summit county saw a 30% increase, and Pitkin county had an 80% increase.  If Real Estate professionals want to capture this growing market, then they need to understand the process and be able to answer their client’s questions.

Rocky Mountain Luxury Property’s own Andie Ohde is breaking down the short sale process this Wednesday, February the 8th at the “Short Sale Master Session“.  The class is located in the Conference room of the Christie Lodge in Avon (directions).

What will be covered:

  • Real Estate Contracts related to Short Sales/ Short Sale Addendum
  • Information on different short sale programs
    • HAFA, Cooperative Traditional, VA, FHA programs
    • You need to understand the different programs for your seller!
  • Essential dates and information related to short sale contracts and short sale addendum
  • The Do’s and Don’ts of what lenders want to see in contracts, paperwork, and the short sale addendum
  • Understanding the short sale process, pricing, and Facilitation and Attorney Service Options available through IREA

In addition to covering all of these topics there will be an open forum for Q&A and a Meet and Greet by Sheila Smith of Integrity Real Estate Advantage.

We look forward to mastering the ins and outs of the Short Sale process with you this Wednesday!