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.

One of the ugliest tactics they’ve used is to make it nearly impossible to save your home. They’ve refused loan mods, prevented investors from buying distressed homes, and done something even worse.

Actively stopping Short Sales.

Their policy for a long time has been to reject them and make them impossible. They demand unreasonable offers, they prevent resale after rehabs, and fix the resale price, among many other dirty tactics.

Now I can’t say if they’ve technically broken the law but it just doesn’t make sense that they should have any right to make policies regarding prices of private property. And they do everything they can to keep their inventory of distressed homes as high as possible simply to give them more control. It’s a vicious cycle.

Washington probably didn’t want the housing market to tank (some senators aside) but they also didn’t want to stand up to Freddie Mac. The political muscle it carries is just too dangerous to mess with, especially with so many Congressmen so deep in their pockets.

The bottom line needs to be to let the homeowners, the investors, the people who are committed to making housing profitable again make the decisions. Put down-to-earth people in the decision making process and let us work to rebuild our country.

Now, borrowers can receive up to 1 year of forbearance from mortgage payments. This could be extremely useful as delinquencies and unemployment remain high.

The economy is definitely slow in recovering and the housing market has been suffering too. And we all feel that Freddie Mac should shoulder a ton of the blame for the tough economy and some small measures of help feel kind of bitter. But let’s start of 2012 with a little more sympathy. If some homeowners are helped by this move then I’m all for it.

But if anyone thinks the long term solutions lie in Freddie Mac’s hands you’re in for a shock as we march into the New Year. The people like us, the Short Sale experts pounding the pavement, will be the ones to get property values up, home prices stabilized, and right the housing market.

I believe in you and your abilities. I’ve seen the successes of my proteges and I know what we’re capable of together. Why not make it a year where you accomplish something great.

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.

Basically what I like about the program are two things:

1) It pays extra cash to the selling agent

2) It rewards owner-occupant buyers

Alright, it’s run by Freddie Mac so you can just imagine how dirty the money is that they’re pumping into the system. But I like that they’ve realized who their real target audience is. Get the selling agent involved and motivated to do his job right. Get people in the community who already care about their home to put down roots.

It’s a tricky business, no question about it. And we’ve seen how the system can be taken advantage of so I don’t expect perfection. But the HomeSteps program is now available in 33 states and if it’s successful it could just be headed to your neck of the woods.

Leave a comment and let me know how foolish I am to believe in anything. Or leave a comment and back me up. Either way, just leave a comment.

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.

So I keep skimming and I read about how real estate losses are always high this time of year. And then one more piece of the puzzle – HARP, the government’s refinance program, is trying to get reinvigorated. So let me paint the whole picture for you guys:

1) Homeowners defaulting – mortgage giants lose money

2) Mortgage giants get bailed out by Treasury

3) Treasury offers to refinance mortgages for homeowners at lower rates

4) Homeowners make lower payments every month to mortgage giants

5) Mortgage giants post losses based on monthly earnings

6) See step 2

Oh boy, I think you see the problem now. Somehow the system got corrupted. Being completely honest here, I won’t deny that some people or organizations involved in this cycle have good intentions. (I’m all for helping people keep their homes, avoid default, make reasonable mortgage payments but we all know that Short Sales are the only sane way to do this, help the housing market recover, and provide genuine solutions.) But good intentions only lead one place. And every bank, mortgage servicer, government agency, and crooked politician who can get his hands on cash will fall to temptation.

I wish the entire country could see how misguided these programs are. But so far everyone prefers to look at the short terms benefits and ignore the big picture. I won’t apologize – I’m a man with vision, who looks ahead and anticipates problems, and I’m not afraid to speak my mind.

What about you?