Standing outside the mortgage-meltdown blast zone

Newsrooms are most fun when something dramatic is happening, and this week, the rapid share-price plunge of Fannie Mae and Freddie Mac has kept things roiling. In classic run-on-the-bank fashion, what seems to have happened is that a Lehman analyst's report on Monday (and given how much Lehman is also teetering on the brink, there's irony in that) focused attention on underlying problems with the two mortgage giants that everyone knew were there but was trying to ignore. Result: Wall Street panic, and the potential of another giant government bailout being required.

I'm not a Wall Street reporter. I have only a pretty hazy idea what Fannie and Freddie do, and why it's so vital. I watch this as a consumer - one whose main personal concern is, does this housing meltdown help or hurt my ability to buy a place within the next few years?

We're in the NYC housing market, where none of the normal rules seem to apply. David and I have the ability to carry what would, anywhere else in the country, be a pretty hefty mortgage payment. What's kept us from buying are two things: down payments and prices.

A 10% downpayment on the absolute least I could imagine getting an apartment in our area for is still $30,000 - no small sum to save up. More realistically, we'd be looking at $45,000 minimum - for 10% down. If a place required 20%, as many co-ops do, you get into six figures, easily. We're not going to have that saved any time soon. I have no idea how one ever saves that kind of sum, frankly, outside a 401(k) or some such over decades.

The second hurdle: As mortgages became more accessible and lenders loaned ever-vaster sums, NYC's already stratospheric prices went through the roof. Costs in our neighborhood literally doubled in four years - a one-bedroom that went for $199,000 in 2002 would have priced at $350-$425k last year. In 2002, a $200k mortgage for an apartment would have been stretching it for me and David. By last year, when we could have handled it pretty easily, prices were twice as high - and once again unimaginably costly. And on it goes.

So - if the mortgage pain gets even worse, if Fannie or Freddie is drastically restructured, if mortgages become harder to get and people can't get easy access to vast sums, then housing prices, even in NYC, will have to come down. But how much will they come down? And if mortgages become less forgiving and harder to get, then people like me and David -- who won't have a 20% downpayment, and are buying in a jumbo-loan market -- are exactly the ones lenders won't want to be lending to.

Chicken, meet egg. For now, I guess I learn to love rent payments.