Yes, there is a lot of fear about what's next for the government-sponsored mortgage giants. But Fannie and Freddie are unlikely to go away. This too will pass.

NEW YORK (CNNMoney.com) -- Fannie Mae and Freddie Mac may need to get bailed out, and there's no question there will plenty of pain to follow. The nation's balance sheet would take a sizeable hit and you can count on higher interest rates.

But make no mistake. It won't mean a complete collapse of the housing market.

"A bailout of Fannie and Freddie would not be good news. But I don't feel it would lead to an Armageddon-type scenario," said Don Wordell, manager of the Orlando, Fla.-based RidgeWorth MidCap Value fund, which owns neither stock.

In fact, Fannie and Freddie will surely still be around - they're just too important to fail. "The structure of the housing market is built on having a secondary market for mortgages," said Peter Sorrentino, manager with the Cincinnati-based Huntington Real Strategies fund, which has no position in either Fannie or Freddie.

What is going on with Fannie and Freddie is a classic panic. Selling is fueling more selling. Both stocks, it's worth noting, are favorite targets of short sellers, who profit when stocks go down.

But notably absent from all the doom and gloom reports about Fannie and Freddie is any sense that fundamentals have changed so drastically for the two firms in the past week.

Before this week, we all knew that Fannie and Freddie would report big losses in the second quarter. We knew they would need to raise more capital. And we knew that many critics of the firms thought they would be better off being nationalized.

But there are only fears, no concrete evidence, that the plague of defaults and foreclosures affecting subprime borrowers is spreading rapidly into the prime mortgage area that make up the vast majority of loans owned and securitized by Fannie and Freddie.

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By Paul R. La Monica, CNNMoney.com