Being in the Real Estate Industry, mortgage specifically, I have heard a plethora of theories on what is going to happen to the mortgage market this year.  If the subprime market fiasco is but merely a market correction as some of the mortgage industry experts are saying, I believe we have little to fear.  I am of the school that we have plenty of loan products in the market today to fill any void that may be created by the loss of "niche" sub-prime and Alt-A lenders.  FHA is in the process of deregulation.  Fannie Mae has the My Community program that has been modified by most of the "big" banks that will fill a lot of the voids created by the implosion of sub-prime lending.

The main cause of the problem in the sub-prime and Alt-A markets is the lack on interest by investors for "second" mortgages.  With the number of foreclosures rising throughout the US, the investors that had, in the past, purchased these risky loans and are not buying them anymore. They have been burned, and not received the reward on these loans the house sold for 30,000 less than the purchase price after a foreclosure.  The risk was there, they knew it when they bought the loan on the secondary market, I don't feel sorry for them, the investors made a killing on these types of loans for a couple of years, and now that the bottom fell out, I am pretty sure they ended up ahead for the most part. 

 More to come...