What will happen to San Diego Home prices and Real Estate if fannie and freedie go under --

The California Association of Realtors sent the following to my email.

GSES HAVE MORE OPTIONS THAN NATIONALIZATION
Contrary to recent news reports, nationalizing Fannie Mae and Freddie Mac is not the only option available to the two mortgage giants, according to a Citigroup analyst quoted in a recent "Reuters" story.

Adding that the GSEs are most effective in their current form and that nationalizing them is unnecessary, the analyst detailed other available options, including: policymakers emphasizing the benefits of the recently adopted backstop plan; the GSEs selling mortgage-backed securities to the Treasury; the regulator lessening capital surplus requirements; and/or all parties waiting until market conditions improve.

C.A.R. supports Fannie Mae and Freddie Mac in their current structure. Created to ensure that an affordable and stable flow of capital is available to lenders for home loans regardless of market conditions, the nationalization or elimination of the GSEs would have severe repercussions for homeowners and the economy, including:

- An instant shortage of capital to the mortgage market, leaving only FHA and VA as a stable source of capital for homebuyers.
- A rapid increase in interest rates on all non-government mortgage products, sinking the nation's housing market and quickly raising the costs of homeownership.
- Homebuyers being forced into exotic loans because of their inability to afford the initial high costs of non-conforming, fixed-rate mortgages.
- Many low- and moderate-income households unable to purchase homes because of the high costs of mortgage-financing.