You're questions are very loaded and would take a lot to answer in depth, mainly because there are no clear answers, one can only speculate. Here is a quick explanation.
The rundown is that a few years ago interest rates were at historic lows making it possible for people with bad credit to get home loans, the demand for houses went up and a large group of individual investors bought property driving up the value of homes with the thinking that they can sell them for a profit later.
The double-whammy is now those people with bad credit can't pay back their loans and are getting foreclosed. This is bad for the banks because the banks never had the money to give these people to buy the house in the first place, the banks borrowed it from hedge funds and other big investment firms, so if people can't pay the bank, the bank can't pay the their investors and it creates a panic where a lot of banks are turning up short on cash.
Because so many people are losing their houses there is a huge inventory of empty homes for sale and not enough people to buy them. So investors who bought houses thinking they were going to go up, instead went down and now they are jumping ship as house values plummet.
So if you're A-paper (
http://en.wikipedia.org/wiki/A-paper) the government sponsored companies will invest in your loan and you are in high demand. But if you are a sub-prime borrower then you're going to have trouble finding a bank who has investors for your loan and will most likely have a very higher than average interest rate.
Being a good time to get a loan now is up for speculation. The real estate industry will tell you that now is the best time to buy as housing values are down and you'll never see another chance like this to buy (they've been saying stuff like this since the day they were created). If you listen to most analysts they will say that things are going to get much worse and if you buy a house now the value is going to go down.