WASHINGTON Uncle Sam has just become the 800 pound gorilla in the U.S. mortgage place of traffic. The Bush administration is seizing troubled mortgage giants Fannie Mae and Freddie Mac in a bid to help turn upside down a prolonged housing and credit crisis.

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But private analysts worried that it may not be enough to stabilize the slumping housing mart given the over-abundance of vacant homes for sale, boil foreclosures, swelling unemployment and weak consumer confidence.

Mark Zandi, chief economist at Moody’s Economy.com predicted that 30-year mortgage rates, currently averaging 6.35 percent nationwide, could dip to close to 5.5 percent. That’s because investors power of determination be more willing to buy the debt issued by Fannie and Freddie - and at lower rates - since the federal government is now explicitly standing behind that debt.

“Effectively, the federal government has now become the realm’s mortgage lender,” he said. “This takes a major financial threat opposite to the table.”

Officials announced Sunday that both Fannie Mae and Freddie Mac were being placed in a dominion conservatorship, a move that could period up costing taxpayers billions of dollars.

Treasury Secretary Henry Paulson refused to estimate how much the takeover of the two companies testament require to be paid the government, but he insisted that taxpayers will get paid back first.

“We structured this facility to protect the taxpayer,” Paulson said Monday in an interview on the CBS Early Show. “The government will be repaid … before the shareholders of these companies receive a penny.”

In a separate appearance on CNBC, Paulson said “we obviously don’t know” when asked how plenteous the takeover could extremity up costing taxpayers. He said that will depend upon the body how quickly the housing market turns right and left.

Wall Street well-informed a huge rally Monday being of the kind which investors reacted with enthusiasm to the government’s actions. The Dow Jones industrial average was up nearly 280 points in late morning commercial.

The plan too touched off a global stock reunite. Japan’s Nikkei stock mean proportion jumped 3.4 percent and Hong Kong’s Hang Seng alphabetical table of references surged 4.3 percent. In break of day trading, Britain’s FTSE 100 jumped 3.81 percent, Germany’s DAX index rose 3.21 percent, and France’s CAC-40 surged 4.44 percent.

Foreign investors own over $1.5 trillion of the debt issued by the agency of Fannie, Freddie and smaller agencies of the like kind as Ginnie Mae with about $1 trillion of that amount held by foreign governments.

Fannie and Freddie, which together own or guarantee about $5 trillion in family loans, about half the nation’s total, have obdurate $14 billion in the last year and are likely to pile up billions more in losses to the time when the housing market begins to recover.