Homes market braces for credit contagion

The Chicago Tribune reports:

As the number of investors willing to buy packages of these specialized loans shrinks, lenders are tightening standards to protect themselves. The first consumers to feel the pinch are those seeking non-conventional loans, including jumbo loans for amounts larger than $417,000, which fall outside traditional regulatory standards.

The market for non-conventional loans makes up 14 percent to 20 percent or less of the entire mortgage market, according to Paul Havemann, vice president of HSH Associates, a mortgage industry publisher in Pompton Plains, N.J.

Last week, North Side broker Beth Ryan said a seller she represents accepted $25,000 less for his $500,000 house after another offer fell through when the would-be buyer was shut out of a mortgage.

If you live in an area(like California),with many homes above $417,000,the demand probably with not be as great the next two years.