freddie_mac_short_salesI have been doing short sales for a long time and I have watched the industry change regarding Trusts, Options and Arm’s Length Affidavits.  Recently, I read that effective January 1, 2012 Freddie Mac is not allowing flipping on short sales and is looking to hold all parties liable if they are aware of reselling the property for a higher price.

The funniest thing is they call it “flopping” which I believe was a typo from a secretary that just carried on and on throughout their paperwork.  In addition, they don’t specify the time line in which you can resell the property for property.  The purpose of the Arm’s Length Affidavit has always been that the seller is not getting the discount for their benefit and staying in the house.  “Make sure you read your Arm’s Length Affidavits and check your sellers loans at to see if it is a Freddie Mac Loan.

Bank of America approximately 2 years ago had placed a requirement on the new buyer that they were to hold the property for 30 days before being able to sell the property again.  GMAC and Wells Fargo has placed a requirement on the new buyer to hold the property for 90 days before reselling the property.   Remember, it is the investor underneath the mortgage companies guidelines not always the mortgage company.  However, I have found that the mortgage companies are starting to adapt these requirements in their own company policies.

When BOA included the 30 day hold provision in a payoff letter, I argued the fact that they are trying to put a deed restriction on the property.  However, they never put that wording in the deed so how in the world would anyone ie.  the new second buyer know that there was a requirement of the first buyer to hold the property for a time period.  They wouldn’t but the first buyer does know and has signed an Arm’s Length Affidavit stating the terms for the purchase.

I have always taken the stand that the Banks/Mortgage companies are the ones who send out their bpo agents/appraisers to advise the companies the value of the properties.  So even as an investor if you made an offer at $100,000 because that is your MAO “Maximum Allowable Offer”, they had determined based on market value provided by their eyes and ears (bpo agents/appraisers) how much they would be willing to sell the property for.

Therefore, if an investor got a good deal and all your paperwork submitted to the short sale lender says you intend to resell the property for profit then you are “ok”.  Until, these Arm’s Length Affidavits are adding additional wording.

NOW, the Arm’s Length Affidavit forms that they are having everyone sign ie:  Seller, Buyer, and Realtors all state the following on Freddie Mac deals even before January 1, 2012:

1.  Each signatory to this Affidavit expressly acknowledges that the Lender is relying upon the representations made herein as consideration for discounting the payoff on the Loan(s) which is secured by a deed of trust or mortgage encumbering the property.

2.  Each signatory to this Affidavit expressly acknowledges that any misrepresentation made by him or her may subject him or her to civil liability.

I/We declare under penalty of perjury under the laws of the State of whatever that all statements made in this Affidavit are true and correct.

Additionally, I/we fully understand that it is a federal crime punishable by fine or imprisonment, or both, to knowingly and willfully make any false statements concerning any of the above facts as applicable under the provisions of Title 18, United States Code, Section 1001, et seq.

I have also seen certain wording in the Arm’s Length Affidavits that you are NOT aware of another contract whether it is verbal or written to sell the property for a higher price.

I am just saying be careful when you are acting as an Investor and a Realtor as the big bad Banks are looking to blame someone for their mistakes.  Don’t stop buying real estate, learn the changes that the Banks/Mortgage Companies “INVESTORS – ie Freddie Mac” are starting to require so you don’t get to the Title Company and sign something that you didn’t understand that can hurt you later.  You just hold the property for the time frame necessary to make a profit!


Happy Negotiating!

God Bless,

Kimberlee Frank

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Kimberlee Frank Real Estate Broker and Teacher/MentorKimberlee Frank is known as “The Real Estate Junkie,” for her unique ability to find ways to creatively help buyers and sellers no matter which direction the real estate market is heading. Kimberlee had already worked as a legal administrator for an Attorney, Builder and Broker for 18 years when she began her Real Estate career in 1998. She dotted the i’s and crossed the t’s on hundreds of real estate transactions and thousands of documents, making her an expert in real estate documentation. Kimberlee’s success began in Fenton, Michigan. She specialized in selling, purchasing, renovating, retailing and lease optioning single-family homes. She has helped many sellers get rid of their “headaches” and helped many buyers find their dream homes!


Since 2003, she has specialized in foreclosures and short sales. After realizing how many families were being forced out of their homes due to financial difficulties, Kimberlee had a heartfelt obligation to use her experience to help those families. She has mitigated and closed over 500 short sales with the mortgage companies, saving Sellers from going into foreclosure. In 2006, Kimberlee and her family moved to Florida. She lives in Oviedo and her Sell Fast Realty Office is in Winter Springs, serving residential and commercial sellers and buyers in multiple counties in Central and Southern Florida.

Kimberlee is also a Trainer and Mentor and has created several different “How To” systems on real estate. Her unique strategies continue to educate real estate professionals across the country. If you have a proven system to help others out of hardship, why wouldn’t you duplicate it and share it with as many people as you can? Kimberlee continues to work with this philosophy!

Kimberlee Frank Author of Big Ideas for Your Business
Kimberlee Frank has been featured on ABC, NBC, FOX, CBS as well as Wall Street Journal, Newsweek, USA Today and numerous other publications. She is the bestselling author of “Big Ideas for Your Business” (Advantage Media 2009). She was also selected as the #1 Short Sale Expert by America’s Premiers Experts.

Please contact Kimberlee at her office at 407-888-3433 to schedule a Free Facts About Foreclosure Seminar. She has numerous testimonials from sellers, buyers and other real estate professionals who are familiar with her giving heart. Whether it is 1 person in need or 1,000…..Kimberlee will educate them on real estate and give them a solution with a peace of mind!

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God Bless,

Kimberlee Frank


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