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Tess Vigeland: Is it just me or does the government takeover of Fannie Mae and Freddie Mac seem like eons ago? Since then Lehman Brothers took the fast train to the bottom of Wall Street's heap, the nation's largest savings and loan Washington Mutual moved closer and closer all week to becoming a penny stock and Tom Brady's out for the season.
Well, the effects of Fannie and Freddie are more wide-reaching than any of 'em, so let's deal with that one. The government in essence now owns or guarantees more than $5 trillion worth of U.S. mortgages. We wondered how that might affect people who are trying to buy and sell homes right now.
Mitchell Hartman has the story from Portland, Oregon.
Mitchell Hartman: From Lincoln Street on Portland's East Side, it's a short walk to parks and funky shops. There's a bus line and bike lanes. The homes are mostly early-1900s Victorians, lovingly restored.
Staci Moritz shows me around her house.
Staci Moritz: We're in the living room now and lovely arched doorways and leaded glass windows and cabinets. Huge dining room.
Moritz and her husband, a designer at Nike, have been trying to sell this four-bedroom house for nearly nine months. Staci, a law school graduate, is at home with a newborn and two preschoolers and paying the mortgage is a struggle. They've reduced the price by $10,000 to $450,000, but so far no offers and little interest.
Moritz: I talked with our Realtor today and she said they're advertising their houses like crazy. You know, the market is flooded and nobody is really buying. I think people are waiting to see if house prices dip further. There just aren't a lot of people out looking right now.
The federal takeover of Fannie Mae and Freddie Mac should help the Moritzes sell their house. Lawrence Yun is chief economist at the National Association of Realtors. He says interest rates are already coming down.
Lawrence Yun: A lower rate will induce more buyers back into the marketplace. More buyers means lower inventory. Lower inventory stabilizes housing prices. And with prices stabilizing, that means the foreclosure pressure will be greatly minimized.
Yun says as the foreclosure rate falls and financial confidence returns, lenders will start issuing more mortgages, credit criteria will ease and homeowners stuck with expensive adjustable-rate mortgages might finally get a chance to refinance.
But isn't easy credit is what got us into the housing bubble? Economist Brian Bethune of Global Insight doesn't think there's any danger of a repeat performance.
Brian Bethune: In fact, mortgage credit conditions are tighter now than they've ever been in the history of the marketplace and all this will do is move the pendulum back a little.
On Lincoln Street in Portland, home-seller Staci Moritz is praying the economists are right and the market will come back soon.
Moritz: You know, there's not a day that goes by that we don't talk about the housing situation at least a couple of times a day. We're just feeling frantic and desperate and we'd like to sell it before the bank wants to sell it for us.
But even if this bailout does revitalize the housing market, chances are it'll take some time. Time that Staci Moritz and her young family may not have to spare.
In Portland, I'm Mitchell Hartman for Marketplace.