The Fannie Mae building in Washington, D.C.
The Fannie Mae building in Washington, D.C. - 
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Steve Chiotakis: A report out today said U.S. mortgage applications jumped last week thanks to low rates and a lot of refinancing. The Mortgage Bankers Association said its index of mortgage applications rose 13 percent to the highest level in more than a year.

And our big question has to do with how you and I will apply for those mortgages in the future. In a follow up to a meeting yesterday with Treasury Secretary Tim Geithner, we're going to ask how to move forward -- with or without government-backed mortgage providers Fannie and Freddie -- in a way that doesn't hurt the housing market. With us to talk about the future of home loans in this country is Bloomberg BusinessWeek reporter Roben Farzad. He's with us live from New York. Good morning. Roben.

Roben Farzad: Good morning.

Chiotakis: So, what exactly happened at yesterday's meeting with Secretary Geithner?

Farzad: It's an open forum, effectively, where the government, the administration admits that, "Look, this is a huge issue, we fess up that there's an unhealthy co-dependency between government financing and the mortgage market. And the economy that's still very dependent on new home starts and the affordability of the American Dream, so we're putting it out there, give us your best tips."

Chiotakis: And Fannie and Freddie each have this target, right? Do they have a future?

Farzad: This is a difficulty. There's a future with a huge asterisk and they may not even be named Fannie and Freddie. There were people out there as notable as Bill Gross, the manager of the largest bond in the world near you guys in Newport Beach, Pimco, and he said that you just have to outright nationalize these companies, there's no use in pussyfooting around anymore. They're kind of living in this purgatory of conservatorship, which really nobody can really define for you in less than five minutes. So why not make the backing explicit and let the government come out and call it a day and say, "Look, we own mortgage finance" because that's already the de facto case.

Chiotakis: Hey Roben, if they go away, what replaces them? What would a Fannie-less world look like?

Farzad: You're going to have to redefine the American Dream effectively. If it's life, liberty and the pursuit of happiness and home equity... that's just not going to be the case anymore because we kind of see a post-apocalyptic market right now, there are very few private options for those who are subprime and even borderline prime. You're going to see the mandates for down payments shoot up to 30-40 percent. You're going to have a lot of people who thought they were home owners be relegated to renting for a long time.

Chiotakis: Roben Farzad, reporter for BusinessWeek, we appreciate it.

Farzad: Thank you.