What a great time to be in the real estate market! Change is occurring at warp speed, and Buddy Kane loves change!

There is a serious problem brewing in the mortgage industry that will have a huge impact on home buyers ability to buy. Months ago I wrote "Bad Market or Bad Decisions"; one of the points made is that the housing "boom" was in part assisted by easy to obtain financing.

That is not working out. Many mortgage companies that gave loans to people with mediocre credit scores and little cash are feeling the brunt of the massive foreclosure problem facing many regions of the country and simply ceasing to fund loans. (Keep this in mind!)

The bigger problem is the huge sums of money being lost. Just think that if the 600 available foreclosures in Genesee County all come with a $20,000 loss for the selling bank...That is $12,000,000 hit in Genesee County alone over 6 months! (ok for all of you intellects... if that company had an outstanding 13% profit margin that would soak up profits on $92,307,692 in revenue! and who has a 13% profit margin in that big of a business?)

Who lost this money? The banks and investors. Investors being private individuals, pension funds, hedge funds and corporate bond holders. Depending on the bond offering that the investors purchased they could own 100% of the loss or 0% depending on the recapture agreement. Needless to say the losses are spread. And how likely are scorned investors to get back into the subprime mortgage market? (Keep this in Mind)

Fool me once, shame on you, fool me twice shame on me. The mortgage industry will rush to strengthen the requirements for getting a mortgage. It is happening as we speak. In three months I bet that 30% of the people that qualify today will not qualify in 6 months with out paying a higher rate and more down payment, will they be able to do that?

Then what happens?

The point being if you are in the market waiting for the next shoe to drop, get after it. The next shoe is coming. This is not negative or not a scare tactic it is reality. If you do not have a 680+ credit score or 10% down and you want to own a house it is time to move. Get a good loan officer and get closed as soon as you can, make sure you find a solid house with good bones and be happy. Long term housing is still a great investment.

How will the new guidelines affect investors? Or ability for "Flippers" to sell houses? How about the income verification loans?

Interesting Times!