In analyzing how the housing market performed in 2007, overall home sales fell to an all-time low last year, with some areas of the state's real estate market fairing better than others.

This disaster was set off by a chain reaction of other events, with real estate investors with a lot of cash, but not enough sense to forecast the future, and mortgage brokers and other lending agencies or firms were too eager to give prospective homebuyers more money than they have the capacity to pay back.

The crisis swelled also in a large part because many homebuyers who were too eager to borrow, and did not mind reading the fine print, which mentioned the terms of their mortgage. Florida, and a handful of other states were unlucky enough to see themselves at the center of this real estate storm. In October, the monthly sales report from The Florida Association of Realtors reported that the year-over-year number of home sales fell by around 29%, even though home prices had only dropped by around 8%.

Mortgage Policy Expectations For This Year

A lot of mortgage lenders in the state, and in other markets as well, thought that their risks were only limited due to rising home values. These lending firms thought it was just okay if a homeowner put no money down because if they lost the home to foreclosure, the banks could recover their investments, and possibly earn more if the home's value went up.

But, the home lender's risks shot up further when home prices began to slide, even on mortgages which were issued under the old rules. It was said that during the height of the seller's market, mortgage lending was out of control, hence the increasing number of foreclosures we see today. For this year, the prospects on the mortgage front are still kind of mixed, and here are the forecasts for 2008:

- Homeowners aren't the only ones facing bankruptcy, as there's also a list of home lenders that are in deep trouble as well. Once established lenders such as Countrywide and Washington Mutual are also considerably cutting back their mortgage exposures as well. Lending firms H&R Block backed out; and Citigroup also noted numerous troubles as well.

With that scenario looming, institutions and regulators may have to tighten lending standards:. In August, most industry experts were caught by surprise when the subprime mortgage meltdown peaked, therefore most lenders raised their credit standards, and the result was of mortgages became harder to get. However, industry watchers say that credit-worthy borrowers should see be able to see brighter prospects for this year.

- Since subprime mortgages are so hard to avail of these times, the US federal government also is planning to expand mortgage programs under the FHA, and many pending related bills are on the discussion block and making their way through the halls of Congress.

Housing industry analysts are hopeful that 2008 will be able to bring a generous inventory for buyers to choose from and that the demand exists; however many of these buyers fear the prices will drop a bit more, so they would choose to wait it out first, before making any decisions.

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