The Federal Reserve has become worried that the slump in the housing market and the rise in mortgage foreclosures may leak over into the rest of the economy and cause a general economywide recession. Therefore they have at their power the ability to try to pump up the economy by number one ... lowering interest rates. And at the same time they are putting in additional money into the system.

"Now I think the impact on the housing market will come in two parts: Number one it is going to be easier with lower interest rates for home buyers to qualify for mortgages and to buy homes," says Dr. Walden, a professor of agricultural and resource economics. "And we have a large inventory nationwide of homes, and so the hope is that those lower interest rates will cause those inventories to be reduced and eventually cause there to be more construction to get that market back in gear.

"The second impact will be for those home buyers who have current adjustable rate mortgages," Walden continues. "Those mortgages have been adjusting upward; their interest rates have been going up. That's one of the big causes behind the increase in mortgage foreclosures.

"Well, with lower interest rates generally the adjustment upward will not be as great, so again the Federal Reserve is hoping that that will try to mitigate the rise in mortgage foreclosure and put a lid on those," he says. "So I think the Fed will sit back now and see if their hoped-for remedies will work. If not we may see more cuts in the future."