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The administration announced a huge policy change over the holidays that will affect the National and Boston real estate market for years to come. Previously the Treasury had limited its support to $200 billion each for the two formerly-private, now government-controlled, mortgage finance giants.

The Treasury department said it is now committed to support Fannie Mae and Freddie Mac with as much capital (multi-billions of dollars) as is necessary to get them through the next three years. There will now be no limit, whatsoever.Starting immediately, the Treasury said in its policy announcement, there will be no "uncertainty about the government's commitment to support the firms as they continue to play a vital role in the housing market during the current crisis."

The significance of the move for real estate is potentially huge, for several reasons.

First, Fannie and Freddie provide funding for well over half the U.S. mortgage market. This makes home sales and purchases possible for hundreds of thousands of consumers.

Next, The fact that the two companies have an explicit, full faith credit backup from the U.S. Treasury means that Fannie and Freddie can borrow in the capital markets at more favorable rates. Those lower costs of capital can then be partly passed along to home loan borrowers in the form of lower interest rates.

Finally, a key reason for the policy change, which also included permission for the firms to retain larger mortgage-asset portfolios, is to help Fannie and Freddie provide deeper loan modification assistance to greater numbers of seriously troubled borrowers.

Both companies are now expected to reach out and offer loan principal forgiveness to delinquent and upside-down home owners. This is something that the current Obama loan modification program does not permit.

Partly as a result, Obama's "Home Affordable Modification Program," or "HAMP," has been only minimally successful in attracting the participation of borrowers in the deepest trouble. Especially those so far behind and upside-down on their loans that they are walking away from their houses, and sending back the keys to their lenders, resulting in greater losses to Fannie and Freddie.

If the revised policy helps keep larger numbers of home owners out of foreclosure and make homeowners quit walking away from their loans, the impact on the Nation's real estate markets and home values will be significant over the coming few years.