You read right. Fannie Mae and Freddie Mac were seized by the government today, the goal being to rectifying the disaster that’s taken place over the last year in the housing and mortgage debacle. Treasury Secretary Henry Paulson, and the Director of the Office of Federal Housing Enterprise, James Lockhart, laid out a plan that would put the two mortgage mammoths into a conservatorship that will be overseen by the Federal Housing Finance Agency.

According to Paulson, all options were put on the table, and the best solution that would meet all objectives (market stability, mortgage availability, and taxpayer protection) was the takeover of Fannie Mae and Freddie Mac.

The regulatory agencies in charge of the plan gave walking papers to the CEOs of Fannie Mae (Daniel Mudd) and Freddie Mac (Richard Syron). Herb Allison, chairman of TIAA-CREF (where I myself have some retirement money sitting somewhere in cyberspace), will take over at Fannie Mae, while David Moffett, formerly a CFO of U.S. Bancorp and senior advisor at private-equity firm the Carlyle Group, will take the reigns at Freddie Mac.

Whether or not these two veterans of the industry will be able to make a big enough difference to help this dismal market remains to be seen. But Fannie and Freddie are pretty much the only place banks and home lenders are able to go in this market to continue making loans. Without Freddie and Fannie continuing to supply that lifeline, the whole housing market could sink to the bottom of the ocean.

Only time will tell if this move by the government is going to be enough to make a difference and sustain the housing market in the months and years to come–and at the billions of dollars to the U.S. that the rescue plan is going to cost. The problem lay in the unpredictability of the future of the housing market, including where home prices go and the level of mortgage rate defaults, as well as the stability in the financial institutions that own large portions of Fannie and Freddie.