Now the dust is beginning to settle from the big boom in residential real estate sales. It is obvious that the sellers market is over. It is predicted that 2007 will be a year with many changes when it comes to residential mortgage loans. At one point in 2005 and 2006, lenders were lowering their credit requirements to increase sales even more in a escalating real estate market.

It seemed to be almost a competition among sub-prime lenders to see who could relax credit requirements the most. The decreasing prices of homes in Florida and other states, as well as record numbers of payment and loan defaults by borrowers has lenders scratching their heads. There is no doubt that 2007 will produce record numbers of homes in foreclosure. Was it greed that blinded mortgage lenders from seeing the obvious burst in the bubble in an obviously over-priced real estate market?

Now that the dust has settled and the money on Wall Street has tightened up, mortgage lenders are licking their wounds and revising strategies and credit requirements. The 100% mortgage loan guidelines are tightening up for sure. No documentation and no income verification credit requirements have jumped at least 60 points. Many lenders have totally eliminated these programs from their offerings to mortgage brokers. At one point lenders were providing 100% financing, no-income verification mortgage loans for borrowers with 580 credit scores. The lenders that are still offering these programs now want to see a minimum of a 640 credit score. Indeed, this is a much safer range for investor portfolios. There is no doubts in my mind that 2007 will be a year of reckoning for everyone associated with real estate sales. In January 2007 the real estate sales market had the largest drop in sales in 13 years. Ouch! The bright side to this is that home-buyers with good to excellent credit standings will be able to scoop up an excellent buy on a home now.