Graphic: MGN Online

“Part of the problem is that we have not heard anything about what the plan is for Freddie and Fannie,” said Joe Cox, a Maryland ACORN organizer.

Although the government-sponsored entities are under conservatorship with the Federal Housing Finance Agency now and their chief executives replaced with government-appointed heads, Mr. Cox is concerned about an eventual push for privatization.

“Privatizing will be a further step in the wrong direction in terms of making loans available to lower-income people versus putting money on Wall Street,” he said. “Our low-income to moderate-income members are not as profitable as rich borrowers.”

Fannie and Freddie have long undergirded the ability of low- and moderate-income consumers to purchase homes and have generally played an outsized role in the housing market. The two own or guarantee more than half of the $12 trillion mortgage market.

As such, their failure would have a devastating impact on the lives of most Americans, said Treasury Secretary Henry Paulson Jr. in a statement. “Let me make clear what today’s actions mean for Americans and their families: Fannie Mae and Freddie Mac are so large and so interwoven in our financial system that a failure of either of them would cause great turmoil in our financial markets here at home and around the globe,” he said in a Sept. 7 media announcement.

“This turmoil would directly and negatively impact household wealth: from family budgets, to home values, to savings for college and retirement,” he added. “A failure would affect the ability of Americans to get home loans, auto loans and other consumer credit and business finance. And a failure would be harmful to economic growth and job creation. That is why we have taken these actions.”

During the foreclosure crisis in the past months, Fannie Mae and Freddie Mac have played an important role in injecting liquidity into the mortgage market, officials said, while juggling its mission and sound decision-making. It’s an act that finally collapsed under the pressures of a foundering economy. “Given recent market conditions, the balance has been lost,” said FHFA Director James Lockhart in a statement.

“Unfortunately, as house prices, earnings and capital have continued to deteriorate, their ability to fulfill their mission has deteriorated. In particular, the capacity of their capital to absorb further losses while supporting new business activity is in doubt.”

Those same market conditions are also wreaking havoc in the lives of ordinary Americans and exacerbating the foreclosure crisis. In August, the unemployment rate rose to 6.1 percent, the highest it’s been in about five years, the Labor Department said.

As a result, mortgage delinquency has extended beyond people with “exotic” or subprime loans to those with prime loans.

“You definitely see the effect in Baltimore. The situation is people cannot sell or re-finance their loans because they don’t have equity anymore or if they have equity people aren’t buying so whatever situation people are in now, they’re trapped,” Mr. Cox said.

While the District of Columbia does not have a significant foreclosure problem, Maryland has seen a relative explosion of foreclosures driven by lax credit underwriting.

That trend began around late 2006 as more people defaulted on “subprime” loans meant for borrowers with bad credit, pushing Maryland up among the ranks of states having delinquent mortgages from 44th to 20th.

In the second quarter of this year, 30 percent of subprime mortgages or 35,000 Maryland homeowners, were delinquent or in the receivership process.

And, more than 36,000 prime loans—4.3 percent of the total—were delinquent or in foreclosure in the three-month period ending in June, according to a recently released survey by the Mortgages Bankers Association. That’s up from 19,000 a year earlier.

“For the last couple of years we’ve seen a pretty diverse group of people coming in here,” Mr. Cox said. “We’re used to serving low-income people but now we’re seeing people from all walks of life, all backgrounds, all income levels, mortgage brokers who’ve been fooled by their own product … it’s cutting across every line.”

And unfortunately, said Ken Rosen, chairman of the Fisher Center for Real Estate and Urban Economics at UC Berkeley, the Fannie/Freddie rescue will not make money available for everyday Joes on the brink of foreclosure, even as it promises hefty severance packages for the departing chief executives and, possibly, shareholders, from taxpayer dollars.

‘’It’s a positive, but it’s a small positive,’’ Mr. Rosen told the San Francisco Chronicle. “It’s a confidence booster in the financial market, not really directly aimed at the housing problem.’’

Mr. Cox said he fears that even as regulators work to tighten Freddie’s and Fannie’s loan standards, low- and middle-income people will be the ones to suffer.

“We know there will be a backlash but that backlash should be directed not at low-income people, who often didn’t understand the terms they were getting or were just getting terrible loans,” he said. “The worst thing that can happen is they learn the wrong lessons from this situation and just cut off low and middle-income people because they’re easy to scapegoat.”

Maudine Cooper, president/CEO of the Greater Washington Urban League, hopes non-profits like hers, who get resources from the Fannie Mae and Freddie Mac to provide homeownership and foreclosure counseling, aren’t shafted. “I hope that in the quest for balancing budgets and looking at spreadsheets, non-profits aren’t overlooked,” she said.

Foreclosure counseling especially requires significant resources because of the complex nature of the loans, which are often sold from one vendor to another over the years.

“We are very conscious of the fact that this will have a serious impact on our budget next year,” Mr. Cooper said. “If Fannie Mae does not fund us we’ll have to cut back or look for other sources. We may have to reassign employees to a different project or hand them a pink slip. It’s as fundamental as that.”