Several weeks ago, American Home Mortgage and its wholesale counterpart, American Brokers Conduit, became a casualtyof the credit crisis. Last year, this company closed over $58 billion in home loans. Despite being, by all accounts, a well-run business, market conditions forced them to file for bankruptcy, leaving nearly $800 million in loans unable to close. Tens of thousands of borrowers have now been left without financing as a result of companies like this going under. It's been announced that Greenpoint Funding is going to close up shop and Countrywide Home Loans, one of the biggest lenders in the country, had to borrow $11.5 BILLION dollars just to stay afloat.

Clearly, with over 100 national lenders having now closed shop in the last eight months, this is no longer simply a sub-prime lending issue. The credit market is experiencing unprecedented turmoil that, according to Mike Perry, CEO of Indymac Bancorp, is "broader and more serious than past disruptions."

What does this mean to the real estate market?

•·    Sellers can no longer be reluctant to accept offers or reduce prices. Tightening credit and diminishing mortgage products will continue to reduce the pool of qualified buyers. This, along with the increase in national inventories, means now that careful consideration will be required when negotiating with buyers and sellers.

•·    Buyers with credit issues or who have difficulty providing required documentation can no longer sit on the fence. If market conditions change, buyers who qualify for a loan today may not qualify a few weeks from now for the same exact loan. Just this week, many lenders have stopped offering no-Doc loans, and some lenders have even pulled back on all forms of stated loans. The state of Nevada has even made statedloans ILLEGAL! As market conditions continue to change, a buyer's pre-approval status can disappear even more quickly, delaying or spoiling the deal. We have actually had to change lenders in mid-stream on several customers due to the fact that we couldn't count on that lender being in business when it came time for the loan to fund.

•·    Sub-prime and Alt-A refi candidates, especially those with ARMs scheduled to reset over the next 12 months, need to act now - even those with a pre-payment penalty.ARMs borrowers struggling with monthly payments now might be shocked to know that monthly payments can double in some cases once an ARM resets. Not only that, guidelines continue to tighten. Being able to qualify today doesn't guarantee that the program will be available if you wait.

All-in-all, the market is actually performing quite well. My partner Dave and I discussed this last week and we determined that we aren't turning down any customers for loans that we wouldn't have turned down 6 months ago. Any market has ups and downs and in the long run the customer will actually benefit from this in the form of lower interest rates and more "sensible" guidelines. Enjoy the fact that we live in the Charlotte area, which is still growing and thriving despite the "market meltdown" in other parts of the country.