Thanks to recently passed federal legislation, getting out from under mortgages with a short sale is easier in the troubled Southeast Valley real estate market.

In short sales, homeowners sell their houses for less than what they owe.

The lender often forgives the difference because it would get more from a short sale than a foreclosure, said Randy Kutz, co-owner of Phoenix Heritage Real Estate Group and Arizona Short Sale Experts.

Avoiding foreclosures helps homeowners, too.

Short sales do less harm to the seller's credit than a foreclosure. Short sellers can face an 80- to 100-point credit score hit, while people who lose their homes in foreclosure can see their credit docked 250 to 280 points. Other circumstances like late payments can also damage credit scores, Kutz said.

Before the recent passage of Mortgage Forgiveness Debt Relief Act, the amount forgiven in a short-sell was considered taxable income for the seller.

"It's going to help a lot of people," said Travis Hamel Olsen, president and principal of the National Short Sale Center in Scottsdale. "A lot of people were not doing a short sale because they were afraid they were going to get taxed on it."

Nick Martini of Mesa may be one Southeast Valley homeowner who gets a break from the new law. In 2005, Martini and his wife bought a house in Mesa and owe $315,000 on it now. The couple has completely remodeled the home's interior, but currently it would probably sell for $280,000, said Martini, 28.

The couple has an 80/20 mortgage, with the 20 percent portion adjusting each year, Martini said.

In November, Martini was laid off and said he is now working a lower-paying job.

And, his wife is five months pregnant with the couple's second child. They struggle to make their house payments now, he said.

"Come April, we're going to fall on our face," he said. "We'd like to keep our house. Basically, we need to make more money."

Should the Martinis short-sell their house, they won't be alone.

Kutz said his companies have 60 short-sale listings around the Valley, and they aren't going away anytime soon.

"I think the short-sale situation is going to be with us for five-plus years," he said.

Even if the Valley's housing inventory is reduced, Kutz said many portions of the region are down to 2004 prices.

Kutz said his team rarely sees short sales resulting from subprime mortgage problems. The sales can result from events including divorce, job losses, deportation and incarceration.

But Kutz said the majority of short sales he deals with result from people who bought or refinanced houses at the peak of the real estate market and now have to sell.

"It's a very tedious process. It's a very calculated process," Kutz said. "It's the brain surgery of real estate."

Short sales became a very active part of the Valley's real estate market in late 2006 and early in 2007, said Jay Butler , director of Realty Studies at Arizona State University. The sales can't be tracked.

Homeowners may have a difficult time evaluating people to work through a short sale with them, Butler said.

"Most of these short sale companies don't have much of a track record," he said. "That's sort of one of the side issues here."

When properties go into foreclosure, that information is public, said Brent Larsen, owner and operator of First Class Realty and National Short Sale Negotiators in Tempe. That means investors might knock on doors of homeowners facing foreclosure. Those homeowners need to be careful, Larsen said.

"You don't want to be in a contract you can't get out of," he said. "The seller can protect himself by understanding there are investors who want to help and those who don't."