Now, don’t get me wrong, I certainly encourage short sales and I’m happy Fannie and Freddie have gotten off their horses. But at the same time I think it’s pretty funny timing from organizations getting pounded from all sides to suddenly switch the focus of the discussion. But anyway, back to the topic.

So they’ve decided to force all lenders and mortgage servicers to render a decision on a short sale offer within 30-60 days. Response time is always a major concern. Now, they have 30 days to respond, and if they need up to 60 days they need to give the agent and homeowner weekly status updates.

This is a nice step in the right direction. If for nothing else, it will encourage people to try a short sale who ordinarily would think the process to slow. So I’m interested to see how the market reacts to this news (and how the lenders get around it!). Fannie and Freddie did a combined 125,000 short sales last year, so let’s see those numbers continue to jump.

What’s your take on this news? Think it’ll have any impact? Leave your thoughts below.

Basically the only way such a program would be effective (notice I said effective, not good or helpful or useful) is if the GSEs participate. They control 59% of all mortgages and $100 billion of negative equity. So the government is really pushing hard (read: bribing) Fannie Mae and Freddie Mac to get on board. They’ve not doubled, but actually tripled the incentives to principal reduction. For every dollar they reduce the principal they get between 18 and 63 cents back.

So a reduction of $100 billion would end up totaling $60 billion. In other words, a net cost to the taxpayer of $40 billion. Ouch!

But don’t worry, they’re considering a program called shared appreciation. Basically what this means is that the lenders will get a slice of any future appreciation in value of the home. So it’ll cost them in the short term but when housing prices rebound they’ll make some money.

Note: it doesn’t sound like the taxpayer is being offered a slice of the pie, but that’s old news already.

Either way just about everyone is desperate to avoid another slew of foreclosures this year. I’m not that concerned yet, considering that 93.1% of the GSE’s underwater homes are still current on their payments. But hey, if you smell smoke . . . move?

Okay, so that intro was a little melodramatic, but sometimes it feels that way. And especially after all of the horrific revelations about Freddie Mac that came out recently, it’s unbelievable refreshing to hear some common sense break the surface. So here’s the latest I’ve heard:

The FHFA (please don’t tune out just because you hate them) laid out a plan to phase out Fannie and Freddie and let the private sector take over their roles.

Woohoo!!

Now don’t get caught up in the excitement and think those clowns up there actually know how to do what they want to do, but at least they want to do what they want to do. To do. Um, maybe that was too much.

Either way, they WANT to get mortgage securitization out of the GSE’s hands and move towards a more privately backed industry. I give them full props for that, let’s just hope they develop a plan to do it. (For starters they admit right up front that the two GSEs put up $100 billion in new mortgages per month and no one can currently match that.) So the challenges are very real, but not hopeless.

Of course, prices will “rise.” But if you count how many hidden costs already exist, plus the ridiculously high cost of the “bailout” you’ll see it won’t be more expensive in the long run.

Only smarter and better run.

Any thoughts? I know you’re all itching to chop up Fannie and Freddie so feel free to let loose.

They’re now accepting REO purchase offers online. Wowee!

Yep, you can check out the entire listing of REOs and real estate agents will be able to submit offers on the spot. How exciting!

Alright, I guess you’ve picked up on my sarcasm by now. I don’t really try to hide it too well, do I? But seriously, whenever I see Fannie or Freddie in the news I do my best to look the other way. But occasionally I just can’t resist cluing other people in on the murky world that is mortgage backing.

You should definitely be avoiding Fannie however you can. And if by some unlucky chance you get caught up dealing with them, don’t believe a word they say. Double check everything, get all promises and terms signed in quadruplicate, and then burying some canned goods and batteries in a bomb shelter somewhere.

So consider yourself warned and please share stories of any Fannie Mae dealings you’ve had the good fortune to survive. We all might learn a thing or two.

Probably not.

So that’s where we stand as we plow into 2012. Fannie Mae, no one’s best friend but they’ve been with us a long time, has proven countless times how useless they are in getting things done. And yet they still decide to open up about their predictions for 2012. And, oh shockingly!, they predict 2.3% growth in the economy.

Imagine, trying at this stage of the game to predict anything. Here’s what we’re facing:

- presidential elections

- Europe crashing

- healthcare uncertainty

- unemployment

- housing market crisis

The list just keeps growing. So why doesn’t Fannie Mae wise up to the fact that a) they’re completely wrong about everything and b) no one’s even listening any more.

Hey, by all means I encourage people to think positively. And I do believe that the more good will and enthusiasm you pump into something the better your chance of making your predictions come true. But I would never turn around after royally messing millions of people over and tell them “Don’t worry, you’ll still end up ahead.”

Yeah! We’d see 10% growth if not for you jokers. So keep playing with your prediction toys and leave the real work to real people. Oh wait, I forgot, corporations are people too these days! Oh well.

Our usually oh so efficient government has no decided it’s the right time to charge 6 former execs from the two hallowed institutions with fraud. And in case you can’t remember what they might have lied about let me briefly remind you:

Instead of holding $43 billion in subprime loans they actually held $141 billion.

A minor difference, I know. But these mistakes do happen. And someone’s going to “pay” for them. Well not actually pay since the real cost of the whole mess is too astronomical to calculate. But they’ll probably be put away in some dank, dirty, 5-star retirement condo to while away the time playing golf, paid for by us. They shouldn’t, after all, have to spend their huge bonuses or anything.

But let’s see some justice done. Or, if not that, at least a good spectacle to find some closure. I’m not going to give this much attention really. I’m more concerned with solving our problems than solving the execs problems.

We’ve all seen the debate rage back and forth about the best way to help homeowners keep their homes. (Let’s for the moment not even get into the question of how they got into those homes in the first place.) Loan mods, principal reductions, etc. Now principal reductions are kind of the black sheep of the discussion, or the pink elephant, I’m really not sure but no one knows quite what to make of them.

The problems with principal reductions become even worse when we start talking about loans backed by Fannie Mae and Freddie Mac. Because you know who gets hit with the losses in the end – you and me. But then again, you and me are the ones benefiting from the reductions. And if you’re a homeowner underwater you might appreciate getting the chance to get even on your loan. Or you’ll sell at a bargain and skew the market even more than it is. Or then again you might opt for a strategic default and knock us all flat on our backs.

So you can see it’s a tricky question.

And as I said, Washington is throwing the challenge at us. Which end of the rope are we going to be pulling? Are we opting for principal reductions and taking the hit as taxpayers? Are we sticking it to Washington and holding firm? I think you know where I stand.

The entire country woke up long ago to the FACT that short sales are the only things that will right the market. Banks are willing to do it. Homeowners who got in over their heads are willing to do it. Washington will eventually get behind it. So forget the debate. Get out there and do what you know is right.

As hard as it may be to believe, the top executives at Fannie Mae and Freddie Mac have received bonuses totaling $12.79 million. Let me just spell that out a little clearer – $12,790,000!! And that’s on top of a report that was released in April which had them at over $35,000,000.

The firestorm that has erupted in Washington over this is a site to see. Senators are up in arms (probably because they want the same bonuses for themselves), Fannie and Freddie are scrambling on the defensive (with arguments like, “Well, if we were private this would be considered low”!), and over sixty senators have called the bonuses such nasty things as “wildly imprudent.” Shocking!

It really is hilarious to see the government bite off more than it can chew. They bailed out the failing organizations, bought up their bad debt, took over the companies, and paid the executives who caused them to do all that. If anyone in private industry got hooked up with that kind of racket we’d call him the godfather. I love watching this play out time after time just for our amusement (oh, right, they’re doing all this with our tax dollars!).

So let’s remember that the only place to look for answers is in ourselves. We can dig our country out of this hole, not big executives moving numbers around. You, me, the Short Sale Servant out there working the market, making sales come together. That’s the solution – and we only get bonuses that we earn.

Do you know what this means? They’ve accused just about everyone in the financial world of violating every known federal securities law relating to mortgage bonds. This mean, in effect, causing the entire financial crisis, the collapse of the housing market, global turmoil, etc.

The solution apparently is to sue the pants off of everyone and hope the FHFA, as the guardian and defender of Fannie and Freddie’s honor, makes up their losses and no one else (except possibly you and me and the rest of the world) get hurt. I don’t know about you but I don’t know if legal action is really going to do any good in this case.

If you think differently, please leave a comment. If you agree, tell me where we’re going wrong and what the next step is. This has got to end eventually but at this point I feel like Washington is just recycling money and it’s not going anywhere. Care to prove me wrong?

Of course, they didn’t say it in quite those words. No, they used fancy expressions like “Our … transfer strategies directly support company goals … to divest certain non-strategic assets, and to continue to improve the company’s capital position by reducing holdings of capital-intensive assets.”

Wow, that’s a mouthful of hot air. What they mean is they’re losing money badly and finally got smart. What happens when a bank loses cash? They look bad and weak. So toss all the bad mortgages on Fannie Mae. What happens when Fannie loses cash? The Treasury dives in and throws more of our money at them. It’s win-win-lose (BofA-Fannie-Us).

Exciting times, aren’t they? Well, not to worry, guess how much confidence Fannie has that you and I have made a good investment in these loans. Not much, I’m afraid. Loans worth $73 billion were sold in one bundle for the grand sum of $500 million.

I’m heading for the hills. Anyone joining me? Would you take a gamble with taxpayer money on a nut-job adventure like this? I can’t believe what our government’s trying to pull on us, but each day is just one insanity bigger than the next.