A new program from the Obama administration hopes to take a plunger to theshort-sale process by essentially forcing banks to accept less than theborrowed amount for a property. It will also pay those delinquent homeowners$1500 to help with relocation.

The idea is that a short sale isbetter for everyone -- banks, underwater owners, and communities. Banks willtake a hit, but less of one than if the home went into foreclosure. Homeownerswill take a credit hit, but, again, less than with a foreclosure. Andcommunities would avoid having empty, foreclosed homes sitting around.

This is economics on a grand scale,so -- despite what various talking heads say -- it's really impossible to knowif and how well this will work. But the Administration hopes it will be anotherfoot helping to kick-start the economy.

Read the fullstory at MSNBC.

Many real estate markets over the past several years saw a dramatic decline in housing prices (the Harrisonburg area was not one of them).  Many families wealth dramatically declined due to the loss of equity in their home and the investments they made in the financial markets. 

In part one of this story, we talked about Credit Default Swaps which allowed sophisticated investors to make bets on the downturn of the financial market and then win big when it happened.  If investors can make bets on the success or failure on Wall Street, why not be able to make bets on the success or failure of Main Street?

If you have a strong feeling about the direction of housing prices or maybe you are a compulsive gambler and are looking for a new fix, you can now place a bet on the direction of housing prices!  Developed by Karl Case and Robert Shiller of the Case-Shiller Housing Index, this exchange traded product (ETP) tracks the price of homes in 10 major markets.  This trading tool creates greater liquidity in the housing market and allows homeowners to hedge against potential equity loss in their homes.

Reuters explains in more detail:
"As described by MacroMarkets, MacroShares Major Metro Housing Up (NYSE Arca:
UMM) and MacroShares Major Metro Housing Down (NYSE Arca: DMM) are paired trusts
that work as follows. When MacroShares Major Metro Housing Up are created, an
equal number of MacroShares Major Metro Housing Down are also created. UMM funds
are invested in the "Major Metro Housing Up Trust." DMM investor funds are
invested in a separate "Major Metro Housing Down Trust." These trusts enter into
a settlement contract: a binding agreement to pledge assets to one another over
time, according to a predetermined formula that is driven by changes in the
Reference Index. The trusts feature a 3x leverage factor, such that the
underlying value of each is intended to track three times the cumulative
percentage change, upward or downward, in U.S. single family home prices, as
measured by the S&P/Case-Shiller Composite-10 Home Price Index."  (Link to Article)

Here is a CNBC interview with Robert Shiller about MacroShares: