While Wall Street is recovering from the mess of the Fannie Mae and Freddie Mac bailouts, the regular consumer that is applying for a home mortgage has come up against more restrictions than any time in history. As the local economy in Indianapolis is still strong, the creditors will have to force themselves to set aside some of the stiff practices that are used to determine creditworthiness. The Indianapolis real estate agent is also a victim in a list of casualties from lending institutions. These agents received partial commissions doing what they needed to in order to get a loan.



There were problems that were created by the lending institutions. Guess who is paying the price? The housing market and the consumer. With Indianapolis real estate, the lending market provided loans that were easy to acquire until the latter part of 2006. This was when the overall real estate market started to bleed with properties that were not selling. Up until then, there were mortgages that did not require a down payment. In addition to that, there were borrowers that had bad credit and the income verification process was not adhered to properly. This caused mortgages to default because the borrower could not continue to afford the ARM (adjustable rate mortgage) loans.

To add to the problem, there were lots of financial institutions that would stick with a certain appraisal company and do a lot of business with them. This would assure that the property appraisals would have a favorable rating in order to get the mortgage. This was happening even though property values were steadily decreasing at a rapid rate. This was caused by the real estate market becoming oversaturated with mortgages. Even with Indianapolis real estate agents, they had clients that went to a certain lending company so that they could get the business. This is when things really got out of control.

Now there are more restrictions that are in place as a result of what happened. It was basically a reaction instead of being proactive to keep this fiasco from happening. Nowadays, in order to get a mortgage, your credit score must be over 650 points. A lot of former Indianapolis real estate agents cannot secure commissions like they used to because of the change. Some of them have even filed for bankruptcy.

With the sudden increase in interest rates on the subprime loans, they were being given out like candy. This causes lots of credit scores to be damaged. With the original loans, it was supposed to be a sure thing that the subprime loans would be refinanced at a lower fixed rate before the rate was adjusted. Now some of these same Indianapolis real estate lenders will not refinance their own loans because of the lack of value in the property.

In order for the Indianapolis real estate market to get going again, something serious will have to be done in order to level the playing field with lenders and borrowers. There must be cooperation and forgiveness on both sides.

Since the Federal Government is working to bail out the financial corporation for the mess they created, they should also think about the consumer. This type of bailout is considered to be bankruptcy. Even though it is considered an option, the creditors should stop using that and foreclosure when issuing new loans. Or within Indianapolis real estate markets, the lending and financial institutions will not have any customers.