Well, I’d try and be really cautious if I were you. I watch all that stuff and I can tell you that there isn’t one thing you can look at and think you’ve got the whole picture. Predicting which way real estate is going to swing is not easy and don’t let anyone tell you otherwise. Sure, you can get a good sense of how things are trending, but you’ll always find exceptions. And just because data is true in one place doesn’t mean it’s true in another.

Let me give you some quick examples:

Housing permits are up by a ton over 2009. But housing starts? Way way down.

Unemployment is down but real estate loans have shot up.

What are you supposed to take away from these? And what if I tell you consumer spending is up by homeowner confidence is down? It’s just really confusing, right?

So here’s what you do in one simple word:

FUGGEDABOUDIT

That’s right – just chuck the numbers in the trash. (And don’t call me out when I bring you some new stats!) You need to find your own deals, find opportunity where you make it, and work on yourself to get up and live your dreams. I’ve shown people the way before and I have never turned someone away because “well, the timing’s not right.” Bull! There is no time like the present. Make your move! Leave your mark! And live your dreams today!

Now, this in itself isn’t any big deal. The terms of the national mortgage settlement state that lenders must shoot for a 120% loan to value ratio for any principal reductions, but Ally and Bank of America have decided to go a little further and go as low as 85%.

They’re happy with themselves for a few interesting reasons:

- they’ve got the lowest penalties in the settlement (about $100 million)

- they’ve modified a lot of loans already

- they’re still hoping to ride the storm

Well, that last one wasn’t in the press release but many of the biggest banks have decided they’d better at least appear like concerned citizens at this point. There are definitely still deals going on behind closed doors but it’s in most banks’ best interests to stick to the straight and narrow.

I’m sure we’ll see some more announcements like this in the coming weeks as everyone tries to look like they’ve learned the error of their ways. But it’s sadly just a matter of time till the next scandal hits.

Now, I know that it should be obvious to almost everyone but there are so many people out there who are trying to make some quick money off of your wild hopes. And they’re not just being dishonest – they’re actually pushing the recovery further and further off. As we’ve seen with big lenders, the more fraud that exists the harder it is for the real work to get done.

The latest unfortunate victim of the recession – it’s less and less worth it for mortgage servicers to stay in the business. In a good economy the number of current loans more than balances the number of defaults so the fees collected outweigh the costs of servicing bad loans. But in our economy the costs of servicing all of the defaults and foreclosures raging around the country means the fees collected aren’t enough. And that means we’ll have less service and lower quality service.

Now I’m definitely not saying you should pity the poor mortage servicers – trust me, they care about you even less than you care about them. But every setback for the economy keeps the recovery from coming. So just keep that in mind. Don’t take anything for granted, and always realize that we’re all connected. Success, actual honest sucess, comes from the entire country working together.

So let’s get started.

These are the questions lawmakers, bankers, and everyone else will be discussing during the coming months as GSEs come under every more intense criticism for their role in causing the country’s financial problems. Many people point out that none of the financial reforms that were enacted in the past few years dealt with the underlying issues that plague Fannie Mae and Freddie Mac. These two institutions, which are essentially government constructed entities fouling the waters of the private market, exploit huge risks at the taxpayer’s expense.

So there is a growing movement to end our reliance on them completely, have them shut their doors, and allow private banks to assume the credit risk that they’ve been carrying. These banks would come under heavier supervision than the GSEs faced and ultimately grow their portfolios much more than the GSEs were capable of, all with less risk.

Some of the changes would include:

- having private funds support the secondary mortgage market

- keep up the pace of conventional mortgages to borrowers, but from private banks

- keep taxpayers away from assuming risks connected to the secondary mortgage market

- support affordable residential and rental housing

Will any of these changes happen? Will Congress be motivated enough to do what needs to be done? Like most issues in Washington, some compromises will need to be made, but at least they’ve put the issue on the table.

Banks are planning on putting significantly more resources into checking out and approving short sales. In the coming months projections indicate that it will become 5-10% more expensive for a bank to carry out a foreclosure. This means foreclosures are just less worthwhile for banks to pursue, bringing short sales more into the picture.

The continuing decline in home prices is expected to go on for at least the next 6 months and foreclosures are a big part of that. Opting to approve a short sale may stabilize the slide in prices, thus profiting banks on that sale as well as future short sales. Sounds like a win-win situation.

The hurdles involved in changing the banking sector’s mindset are immense. But everyone with their eyes open is aware of the problems foreclosures cause across the board. So short sales may become the only option. We’ll just have to wait and see.

That’s essentially the situation this week. 31 new banks were added to the FDIC’s “Problem List” bringing the total to 806. However, total assests of those banks was down from $403 billion to $379 billion. (Not to freak you out, but this year alone 149 banks have gone under. Oh right, that won’t freak you out if you remember last year’s numbers.)

So back to the issue at hand, is this a better situation or a worse one? On the one hand, less assets at risk provides for more aggressive lending. But more banks added to the Watch List means more neighborhood institutions are going to be careful about their lending practices.

If you ask me, I’d have more capital at risk but less banks. Banks provide the real potential for growth in the economy and there need to be as many sources of capital out there as possible. If the majority of risky assets were concentrated in fewer banks, I think it would prove much better for the economy.

People are tossing around words like “cautiously optimistic” and “recovering from the financial crisis” but their mostly meaningless since they’re used so often. So let’s hear from you guys. Let me know if you think I’ve finally lost my mind and need a long vacation. Or just let me know what your thoughts are on the lending situation.