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Freddie Mac announced several incentives for those who help people facing foreclosure. With recent news describing Freddie Mac as being insolvent it may come as a surprise to some.

Freddie Mac today told mortgage servicers it was doubling the amount of money it pays
for each workout that keeps a delinquent borrower with a Freddie Mac-owned
mortgage out of foreclosure.

One of the nation's largest investors in residential mortgages, Freddie
Mac also announced it will start reimbursing servicers for the cost of
door-to-door outreach programs, give servicers more time to negotiate
workouts in states with fast foreclosure processes, and make administrative
changes intended to streamline the workout process.

"We are taking these steps because we want to reinforce the tremendous
importance of workouts and reward their use," said Freddie Mac Vice
President of Servicing and Asset Management Ingrid Beckles. "Giving our
servicers more time and greater compensation to help troubled borrowers is
fundamental to preserving homeownership and maximizing our efforts to
minimize foreclosures."

Freddie Mac is also extending the amount of time a person can negotiate their mortgage during the foreclosure process in the faster foreclosure states.

In addition to Washington, DC, the affected states include Alabama,
Alaska, Arizona, Arkansas, California, Georgia, Hawaii, Maryland, Michigan,
Minnesota, Mississippi, Missouri, New Hampshire, North Carolina, Rhode
Island, Tennessee, Texas, Virginia, West Virginia and Wyoming.

Specifically, starting August 1, 2008, servicers are allowed up to 300
days (10 months) from the due date of the last payment to the foreclosure
sale in these states to seek aggressive and sustainable workout solutions
for the borrowers and still meet the standards set in Freddie Mac's
Servicer Performance Profiles. The company uses the Servicer Performance
Profiles to measure and reward the quality of a servicers' investor
reporting and default management.

Even though the laws in these states permit a lender to foreclose in
less than 300 days, this announcement means Freddie Mac will permit its
servicers more time to complete foreclosures. The new policy won't affect
borrowers in states where the foreclosure process already exceeds 300 days.

"Part of the reason home prices are declining is a fundamental deterioration in the housing stock," said Glenn Kelman, CEO of the online, discount broker Redfin. "During the boom, nine out of 10 houses for sale in many markets were in prime condition. Now, for every 10 houses, at least three are dogs."

Most of these mutts are foreclosed properties that have been permitted to fall into disrepair by lenders overwhelmed with thousands of vacant homes. If these houses sell at all, they're going for bargain basement prices that are hurting home values throughout the neighborhood.

"I've never seen so many houses in this condition before," said Ray Anderson of Buyer's Advantage Real Estate in Auburn Calif., near Sacramento. "And I've been in the business 20 years. I've seen bank-owned properties in the past. They were never like this."

Distressed properties usually sell for discounts of 10% to 40% below comparable, well-maintained homes, according to Tom Inserra, executive vice president for Zaio, an appraisal company that is creating a national database of home values.

Richard Smith, CEO of Realogy, the parent company for Coldwell Banker, Century 21 and Sotheby's International Realty, estimates that homes that are not bank-owned have actually only seen price declines in the low single digits over the past 12 months. That's compared with the 15% price drop recorded by the S&P/Case-Shiller Index for all homes over the same period.

While the subprime crisis is still in full swing it will take time to see what kind of effect this will have overall.

The last few weeks have seemed to show an improvement in the economy but many economists are warning to stop looking for a silver lining. An article today in the LA Times had quite a bit to say about it.

Back-and-forth movements are typical when the market is trying to put in a bottom, said Scott Wren, equity strategist for Wachovia Securities. Plus, he said, "you're getting a lot of mixed news."

Last week, after seesawing, the Dow Jones industrial average finished down 0.6%. The Standard & Poor's 500 index ended the week up 0.1%, and the Nasdaq composite index rose 1.6%.

This week, investors will keep monitoring the energy markets and also see how the housing industry is faring in the National Assn. of Home Builder's index today and the Commerce Department's Tuesday report on July new home construction.

At the same time, Wall Street will be gauging the financial health of consumers in the earnings reports of retailers including Home Depot Inc., Target Corp., Gap Inc. and BJ's Wholesale Club Inc.

It has been hoped that the lowered prices for oil will help stimulate the economy again but inflation in other commodities seems to be picking up that slack. The job market is not helping matters either.

Because the job market tends to influence consumer spending even more than home, fuel or food prices, Wall Street has been nervous that the job market has shown few indications that it is improving.

The Labor Department disappointed the market last week when it reported a smaller-than-anticipated decline in the prior week's claims for unemployment. Another downbeat reading on unemployment this week could worry investors even more.

For every negative prediction there is a positive as well. It is anyone's guess where the economy will go from here.