Fannie, Freddie and Pre Foreclosures

What changes will be made at Fannie and Freddie, the 2 biggest mortgage companies in the country, and will they affect Pre-Foreclosure?

I doubt the pre foreclosure short sale process will be changed anytime soon. There is too much more to do to keep the giants running now and the goal is to get them to be running profitably first. I doubt they are looking at how to recapture a profit in the repossessed properties for quite while.

I also don't believe it has a chance in heaven of being solved in two months before the current presidency or Congress changes. So...what's next?

In the paper today it was discussed the 3 possible ways to save/restructure Fannie/Freddie. As I read the options, it will be a battle.

• One way to "save" them (and that's an oxymoron with this particular path) is wait until they "right" themselves (remember the only way to right them at this point was with yours and my taxes dollars gushing in to back them - billions of dollars if you remember) and return them to the way they were (when we had to give tax dollars to save them) before now - conservatorship (let the government run them- which is exactly who is running them when they were run into the ground) and add safeguards to prevent another crisis - huh!
  

Yes, I'm sure they would like that way. These Congress people long defended Freddie and Fannie in their current state because they did provide more affordable housing. Affordable housing for the lower income people who, due to Congress voting to give people loans when they have:

• no down payment,
• no way of saving for one,
• have a low credit score and
• no talents, skills or money to ensure repairs where made to the house,

able to buy a house anyway.

Isn't that law one of the main contributors to the foreclosure crises to begin with?

I also heard on radio talk show this week that 16 of 25 supports of Fannie and Freddie to keep the status quo were democrats getting BIG payouts (err campaign contributions) from these organizations. ..over the last 20 years.

That's like "thank you for your support, here's $500,000 for your campaign." Yes, I'd hate for it to change if I was making that kind of money for just voting YES.

• A second option was to made by Sr. officials at the Treasury Department to shrink the companies and turn them into private utilities. This would make their profits and activities tightly regulated and their large investment portfolios reduced.
  

Seems to me though I remember utilities having plenty of scandals of their own and losing money. Maybe they just have less scandals. And aren't they still regulated by the government? Isn't the government overseeing Fannie and Freddie the problem?

• The third option - and I'm saving my personal favorite for last - is to privatize it. Let the government taxes bail it out (it already has) and let it right itself. Break it into small private companies and let them sell stock. Be pubic. Make a profit. And if or when they get into trouble the next time, the Federal Government has NO business to bail them out. They sink or swim.

Sometimes it seems we have to remind the government leaders we are not a socialist country. We are CAPITALISTS. Say it again, and repeat after me: we are capitalists. We make choices to invest our money. Sometimes we make a lot more money. Sometimes we break even. Sometimes we lose our shirts. But it is our choice and we don't expect the government to bail us out. We invest money we can afford to lose. And if we lose, we learn something to do better the next time. That's capitalism.

Obvioulsy, I vote for #3. Right now while Freddie and Fannie are in conservatorship , Freddie and Fannie are being run by the exact same people who got it in the position it is in right now. How scary is that?