[dtw]

The government seized control of their pet GSE's yesterday in a move that has caused a major rebound in the market already this morning. Market confidence is up, and this should be a decisive factor in the ultimate turnaround of the housing market. In fact, mortgage rates may decline even more in the coming months.

The catch? Ah yes, the US taxpayer is now directly responsible for FNMA and FHLMC (Fannie May and Freddie Mac). Combined, we are now collectively guaranteeing around $5 trillion in mortgages. Let me see if I can spell that out:

$5,000,000,000,000.

That rivals the national debt. As a homeowner, I am not only responsible for my own mortgage, but also a share of about half the conforming mortgages in the country.

On the other hand, we must be mindful of the role these GSEs have played for decades. Without them, mortgages would be much harder to come by. If you've shopped for property in other countries, you know what I mean. And if the agencies had collapsed, it could have caused the economic cataclysm of the century.