I think the impact on Tampa bay is huge for several reasons.

There is a glut of properties at every price point.

There will be less buyers qualifying for purchases as lenders tighten their rules.

The qualified buyers in the market are only considering distressed properties or lowballing offers.   A lot of buyers are still waiting for more decline before they jump in.

The tax rates and insurance rates continue to go up as the value of properties are going down are leveling off (opinions and stats vary).

I am very concerned.  I own several houses and condos. I was hoping to flip for cash flow. I may have to rent out for two to three years.  

Namneet,

Recent changes in lending requirements do not just affect home loans. They will ripple through other industries. In my area, this is another blow to the auto industry.

Namneet

Yes, the sub-prime mortgage seems to be hitting the skids, and a lot of first-time home buyers seem to qualify for only those types of loans.  That means we might not have a lot of first-time homebuyers, which means Joe can't sell his house and move up to Tom's house, and Tom can't sell his house to move up to Mary's house, and so on.

Could this have an impact on our market?  Perhaps.  And perhaps not.  Most borrowers who fit the sub-prime mold also fit a host of other mortgage programs that are still, and will continue to be, available.  

Not all mortgage lenders are equal.  What I mean is, not all mortgage lenders can lend the same or similar products.  And sub-prime lenders play into that by telling borrowers that this or that program is the only one they can qualify for.  Sure - for that loan officer. He stands to make more money on that sub-prime loan. And, he doesn't offer those other loans his borrower can also qualify for - and are better suited for him.

I happen to have a mortgage background, and I know who the lenders are in my area, and what they can and can not do.  Thus, I have a much better idea of what loan programs work best for who.  But most agents don't have this background.

A good agent will have his or her borrower talk to several different lenders at roughly the same time (as in within just a few days). See who can do what for your borrower. You just might be suprised. Believe it or not, a lot of people who have a sub-prime loan will most likley qualify for FHA or USDA Rural Development Loan programs, as well as many conventional first-time home buyer programs.

So, take it upon your self to talk to a number of mortgage lenders - brokers AND banks.  Find out what they can do, and you'll have a better idea of what's available when the next first-time home buyer who doesn't have stellar credit comes along.  You just might help keep the real estate market rolling along.

Great post Lew!

I agree there are still programs out there for the first time buyers but you won't see the 2 -3 year programs designed to assure the demise of the first time buyer when the interest rate explodes. As to insurance rates, Florida has taken steps to reduce the rate and we will see the reduction in June. In addition they will also be doing something on property taxes this year and it does need to be addressed. We had similar talk when the SL crunch happened and the demise of some sub prime lenders is not the pin that will break the real estate bubble. Real Estate remain the best investment in America and will remain so in the future.

I agree with Lew, work with a lender that has FHA financing not all do! and UNDERSTANDS the guidelines of the program, you will find that they can deals that subprime programs could not touch in thier best day.

I think that this is probably a good thing in the long term. Speaking as a Mortgage Broker we saw a lot of "bad" lending practices and just plain old lack of common sense. Many of us here in the Souoth Florida market were expecting the rise in foreclosures and the smarter ones were preparing for it. It also helps weed out the people in the industry that really are not willing to be the professional that the public deserves. There were way too many "fly by nighters" running around these last few years.

As for the rest of us we simply learn what is still available for buyers and keep up with the changes. That's all that we can do. This is where those who bothered to learn the FHA and Fannie Mae products are going to shine while the rest that were letting themselves get sucked in by the subprime lenders to abandon those FHA's are going to have to play a mean game of catch-up.

That's just my two cents anyways...

The sky is not falling.  The economy will protect itself.

Old answers will come back and new answers will be invented.

There are too many people trying to make money selling loans for somebody to not figure it out.  

There are also too many "big money" pools wanting to get better returns than they can get playing it "safe".

For now, watch for a return of Seller Second Mortgages and more FHA Ameridream programs with the seller coming up with the buyer's 3% down payment....

Where there is a will, there is a way!!!

To put my silly 2 cents into the discussion of the great experts here

their is not a possibility that a machine equipped with 1% option arm no doc 100% ltv could bring in more buyers with higher offers then a market limited to 95% ltv which requires your hard earned money to be spend to buy that home...!!!

However this should not be confused with a crash since its just a adjustment to reality

no doc nothing down is not reality and for awhile the ones using those loans where able to skyrocket the market and heat it up fantasy land increasing prices to the height where hard   working families cant reach but now its over

Responsible people would need to learn that it takes principles to save up money get to keep your credit in tact in order to buy your home