Housing Woes Won’t End With Bailout

The federal government's takeover of Fannie Mae and Freddie Mac may save the battered real estate market from a complete meltdown. But financial experts say the bailout won't lead to a housing recovery just yet.

There is still a large supply of unsold homes on the market and an increasing number of foreclosures that threatens to add to the glut.

What's more, rising unemployment and increased job losses should add to the woes for lenders, brokers, builders and others tied to the housing sector.

On the bright side, the Fannie and Freddie rescue is likely to help bring mortgage rates down. That's because it should help lower the gap between mortgage rates and Treasury bills, a spread that had risen in recent months on investor concerns about the firms and the rising mortgage defaults.

Fannie and Freddie had warned last month that they would cut back on the growth of their mortgage loan portfolios as they tried to preserve the capital they would need to cover rising losses.

With the Treasury Department now standing behind the firms, most experts expect additional money will be made available to mortgage lenders. Those two factors prompt some to believe that the rescue will be a significant help for housing markets, even if it doesn't solve all the problems.