LENDING CRISIS
Mortgage lenders rely on the secondary markets to borrow money to make more loans. The problems started as subprime mortgages (loans given to customers with poor credit history) started going delinquent at faster rates.
The problems have spread to the broader mortgage market, making investors nervous about almost all types of loans that cannot be purchased by government backed loans (Fannie Mae or Freddie Mac).
Bottom line is that it is tougher to get a loan if you have blemishes in your credit. In addition lending standards stemming from the subprime crisis likely means fewer buyers, pushing down home prices.
