Rewind 2008: Reviewing the housing, financial crisis

Year 2008 has been a year when new home sales in the US fell close to their lowest in nearly twenty years, US housing markets faced a downturn that would not only produce record foreclosures but would also include the government seizures of mortgage giants Fannie Mae, Freddie Mac.

Here is a transcript of CNBC’s Maria Bartiromo’s comments. Also watch the accompanying video.

Declining affordability began to take its toll on the demand for homes. Ben Bernanke, Chairman, Federal Reserve said, "Borrowers can no longer rely on home price appreciation to build equity."

Tumultuous housing crisis

It's been a tumultuous year for the housing industry. Foreclosures hit their highest level in 30 years impacting everyone from Wall Street to Main Street. Larry Summers, Lead Economic Adviser to President-Elect Obama said transparency was a concern in January.

Lawrence Summers, Former US Treasury Secretary said, "Everybody is groping around in the dark trying to figure out if their loans are safe or whether they are not. Somebody's got to turn the lights on."

Financial crisis sets in

In January, Countrywide Financial - nation's largest mortgage lender would be the first to fall in 2008. Bank of America rescued the firm for USD 4.1 billion ending days of speculation the lender would be forced to declare bankruptcy. At the World Economic Forum, George Soros said that the financial system model was essentially broken.

George Soros, Chairman, Soros Fund Management said, "We really have to reconsider the whole policy which has been in my opinion misplaced on relying on markets to police themselves to recognize the risks."

Fannie, Freddie takeover- September 7

Washington recognized the risks in mortgages, seizing control of Fannie Mae and Freddie Mac which together hold or guarantee about half the nation's mortgage loans.

Need for policy overhaul?

Alan Greenspan, Chairman, Former Federal Reserve said, "You cannot have a type of organization which is half public, half private."

Bailing out the banks

In September, Washington unveiled a USD 700-billion bailout plan. A move intended to spur lending in the banking sector. Fannie Mae's Daniel Mudd said that the action by both the government and lenders would help.

Floor on markets eventually

Daniel Mudd, CEO, Former Fannie Mae said, "All of these initiatives will have a cumulative affect and put the floor back under the market."

Floor or not, the debate is still out for 2009 on when investors can expect a recovery in the housing sector.