Mark -

I agree with Michael's comments. I expect tighter regulations on underwriting. I am not sure about interest rates. I see factors that will hold them steady and I see the real live action on the lending front that says; unless you have impeccable credit, cash in the bank, and can afford a home (or two or three) you probably are not going to have many loan options. Those with little cash down, average credit will be hit hard on the monthly payments because of interest payments. With interest only loans going up and up, affordability in California become completely dependent on FHA. (At least that is an option now.)

Specific to the bail out...anyone who remembers the saving and loan debauchery had to see this coming. I agree with T Roger - it is a shame that trillions of dollars were specifically made by the banks in trouble now and yet tax payers will be sent the bill. On the flip side, greed is an incredible driver in a free market.

CJ

CJ brings up some good points. I the big, bad S&L bailout/crisis and the GSR called the RTC (Resolution Trust Corp) which did what all of us REO agents are doing--liquidate the bad assets! I had a copy of this tome and it was like two metro yellow page editions combined!! But what the government did at that time was to go to each Savings and Loan and determine the A+ rated loans from the "junk" loans. They then in turn had a big fire sale. The outcome was the S&L's now had good stuff on the books and all the junk was sold off. We are doing this now but in a "reactive" sense. Someone goes belly-up, the Banks foreclose, the REO's hit the market.
Instead of going out into the lending world and trying to determine the A+ performing loans versus those in trouble, we are playing a game of brinkmanship with the financial houses that backed these loans. Until we systematically go through all the holdings (yeah! Big, major pain in the tush!) We have NO idea how deep this crisis is.
It's a wonder during the election cycle the administration did ANYTHING!! McClain said, "No bailouts" and OBama said it was prudent. We loose Fannie Mae/Freddie Mac--good bye housing market!! But I do agree the takeover was long overdue. These guys were cooking the books on a scale not unlike Enron. Once again NO OVERSIGHT!!
Pendulum swings like a pendulum do!

I personally feel this is morally indefensible--privatize profits and socialize losses, instead of, say, spending all that money on providing a national health care system for everybody like a normal civilized country. That being said, I'm looking forward to a long period of serious austerity in underwriting standards so the market can purge itself of the obscene financing and transactions of the past few years. Prices have a ways to go (down), and with the economy tanking, this is a welcome step towards a more rational real estate market.

(not Trulia's opinions, mine only)

They have to control them as they have proven they can not control themselves. They are neccessary in the houseing market and economy to be prooped up, fixed and made to work as they were intended. I think when banks start lending again to the people with good credit and money to put down, all the housing markets will start to come up except it may take a little longer in the over built condo markets.

Take a look at the "After the Bailout" story online in Forbes for some clues as to what the impact may be on the housing market. If anything the take over has allowed Fannie and Freddie to continue to make loans. It appears the recent review of the books made the Government decide to move into this scenario. Here is the Forbes link http://www.forbes.com/home/2008/09/07/fannie-freddie-mortgag… As for the San Francisco market, I think it will depend on whether buyers can obtain financing and how buyers and sellers react locally to the situation. Another moment I wish I had a crystal ball. Emily Medvec

Both outfits are quasi government. They are called GSE's(government sponsored etities) and as such have always been backed by the full, faith and credit of the U.S. The latest emergency housing bill made it very clear the U.S. was 100% BEHIND these two GSE's and this has now been borne out. Like most other large financial institutions they both didn't grasp the depth of the housing implosion. The only positive is the last 5 years in the major bubble markets prices had gotten beyond the underwriting guidelines of both of these entitiies so even though they'll be hit--they may not get hit THAT hard. The only issue I see is if the next big Bank goes belly-up is their enough financial resources left to prop them up?
As far as a street effect here in Northern California? I can see further tightening of credit wih the pendulum swinging to the extreme side of regulation, toughter underwriting guidelines, more stringent appraising and higher fico scores for everyone concerned.
But that said, a global economic slowdown, falling commodity prices, unemployment heading north, should drive everyone into treasuries, safe harbors, which should bring DOWN interest rates. High 5's in the next couple of weeks? But for the SF market, your median home prices haven't seen Fannie/Freddie underwriting guidelines in years!! But all this is changing as we get tighter and tighter. For a great take on the current happenings I refer you to Lou Barnes column at his web site: http://www.boulderwest.com/news/index.html