Fannie Mae to encourage short sales?

According to an article in the Wall Street Journal (subscription required), Fannie Mae is testing a program in Phoenix and Orlando, two of the hardest hit markets, whereby Fannie would agree to a minimum price for which it would be willing to sell a home at, rather then wait for it to fall into foreclosure and sit vacant for weeks and months.

Both Phoenix and Orlando have been particularly hard hit by foreclosures. Home prices fell in the Phoenix region 33% last year through October, according to Standard & Poor's/Case-Shiller home-price index, the worst decline in the country. Some 29% of the state's borrowers had negative equity in August, and an additional 6% of borrowers were approaching negative equity, according to a report by First American CoreLogic, a data provider.

Most recent Case-Shiller home value data