A phenomenon that consumers, lenders, bankers and Realtors alike are experiencing on the ground gets a 10,000 mile view from the Strib, along with the requisite human interest angle:
...so when they backed away from a complicated deal in which they tried to buy a house from a borrower who owed more than the house was worth, they thought that getting a mortgage on another, less-expensive house would be a breeze, as they had already been approved.
They were wrong. Between canceling that deal and finding a new house in Golden Valley, the mortgage markets continued to unravel, access to credit tightened and the lender who had approved them several months earlier was now asking for a bigger down payment and more detailed documentation, including photocopies of their Social Security cards.
"I was almost on my way to the doctor to get a finger pricked to give blood," Jeff Prottas said.
Obviously, the tightening of lending standards and new restrictions to that "giant pool of money" we all used to so happily wallow in are going to have some significant short-term effects on the housing market. Recent policy changes like FHA's forthcoming removal of seller-funded down-payment assistance on October 1st will have consequences on buyer activity and home sales.
Some argue that at a crucial turning point in the market where prices are falling low enough to finally encourage some buyers to enter the market, this is exactly the type of change we don't need.
Others argue that it's about freakin' time that lenders and consumers once again approach their two-way financial tango with some legitimate fear of risk.
What do you think?