The Flathead Beacon reports from Montana. "The pace of second-quarter existing home sales fell by 7.1 percent in Montana, compared to the same time in 2006, according to numbers released last week by the National Association of Realtors. 'For sale' signs are propping up all around Flathead Valley, but Ted Dykstra, president of the Northwest Montana Association of Realtors, attributed that to an excessive number of homes on the market, not slow sales."

"He said many people, after watching their homes appreciate rapidly for a few years, are cashing in – while the number of homes sold has remained the same. Another issue, Dykstra said, is that the market can appear to be softening due to the sheer number of real estate agents in Northwest Montana."

"'We’re not seeing that. If we get into a situation where we have four or five years of inventory then we have a problem,' Dykstra said. Right now, he estimated, the area has between 23 and 27 months of inventory."

The Idaho Statesman. "Ada County home sales for August will likely be the fewest for that month in almost a decade, according to a local real estate broker. The sluggish housing market is weeding out people who suddenly became home builders and began building high-priced 'spec homes' when Idaho was one of the hottest real estate markets in the country, said John Cotner, owner of Cotner Construction."

"Those high-priced homes are not finding many buyers as consumers are concentrating on homes in the $200,000 to $250,000 range. The result, he said, is that people who were not real builders are being forced out of the business. 'A lot of bad apples are being shaken out,' he said."

"In some cases, Cotner said, builders who sold spec homes to investors now find themselves competing for buyers against those same investors."

The News Tribune from Washington. "Saving money for a down payment might soon be the newest trend revisited in financing the purchase of a home. At Community One Financial in Puyallup, senior loan officer Jayme Coffey said that in the last three weeks she and her colleagues scrambled to find new funding sources for 25 loans that had been preapproved for no-money-down mortgages – sometimes called"

"80-20 or piggyback loans – that some banks would no longer finance. 'The 80-20 is effectively dead,' she said."

"Adam Stein, president of the Washington Association of Mortgage Brokers, called the recent mortgage lending environment 'a credit democracy.'"

"Not so today. 'There are people right now who aren’t getting home loans. That’s the sad reality,' Stein said. 'Right now the market is in an overcorrection.'"

"Among those left out are self-employed buyers with difficult-to-verify income and buyers with imperfect credit history, Stein said. He predicts the zero-down mortgage products left will continue to retreat in the next six months, just as the 80-20 has."

"'I looked for it today and couldn’t find it. I called a couple places where I used to do business,' Stein said last week. 'It was offered a month or two weeks ago.'"

"Chris Dunayski, who owns High Point Mortgage in Puyallup, said mortgages in the near future will look much like what buyers used in the 1980s and 1990s. Twenty to 30 years ago, a 20 percent down payment was considered the norm." "Twenty percent of July’s $281,400 median home price would be $56,280."

"'I would think at some point 100 percent will be gone and people buying homes will be responsible with their money and save and invest,' he said."

The Seattle Times from Washington. "In the last several weeks, the national mortgage crisis has spread beyond the subprime market to jumbo loans. Nearly half of the single-family houses for sale in King County, plus 21 percent of the condos, have sales prices high enough to require jumbo loans, and that's if buyers reduce their loan amount by putting 20 percent down."

"'Funding sources have dried up for all loan products except for conforming loan product,' explains Erik Hand, president of Bellevue-based Response Mortgage. 'Anything outside of those product types and your options are limited because there's no investor appetite for those loans anymore.'"

"Home purchases are almost always contingent on financing and 'we're probably in something of a flattening [housing] market right now while we work through this,' says Mike Skahen, owner of Lake & Co. Real Estate in North Seattle. 'It makes me a little bit nervous because no one knows where it's going right now.'"

"Last week, his office was handling a $1 million house purchase when the lender went bankrupt. 'The buyer is looking for an alternative lender now, and hopefully she can find one,' Skahen says."

"From his high-rise office in HomeStreet Bank's downtown Seattle headquarters, residential-lending director Rich Bennion views the widespread mortgage crisis as 'the inevitable correction for some of the excesses of the past several years.'"

"Bennion suspects some consumers will shy away from buying altogether. 'They'll decide that instead of buying now, they'll wait a year. Or instead of buying now, they'll stay put and remodel the kitchen,' he says. 'It has a dampening effect on the housing market, no question.'"

The Tigard Times from Oregon. "'Is the housing market getting worse?' Maybe it has everywhere else but not in Oregon, and definitely not in Portland or its surrounding communities, including Tigard, Tualatin and Beaverton, according to local agents."

"Broker Eva Sanders says many sellers still think they live in a 2005 housing market when buyers were basically standing in line for houses. '2005 was an incredible sellers’ market,' said Sanders. 'People thought, 'I can get anything for my house and I don’t have to do anything to it.' That has all changed.'"

"'Now buyers have more inventory to choose from. Buyers now have the ability to comparison shop,' Her rule: 'If you compete you can sell, if you’re not willing to compete, you won’t sell.'"

"'It depends on where you are and what you have,' said Sanders. If, for example, it’s a townhouse up at Progress Ridge in Beaverton, Sanders says, 'There are way more townhouses than we can absorb for a long time. It’s probably not going to sell.'"

The Lake Oswego Review from Oregon. "Local Realtors said the recent credit crunch is part of the market’s return to normalcy. 'Everybody knows that it was time to adjust,' said broker Mary Jo Avery. 'If it kept going in the direction that it was going, people wouldn’t be able to afford homes. People with no down payment are not going to be able to buy anything for awhile. You have to have some cash to buy a house now.'"

"July saw a 21 percent drop in the number of pending sales in Lake Oswego and West Linn, compared with the same month last year. The number of home sales, including condos, in Lake Oswego and West Linn in July 2004 was 194, compared with 138 this year. The number of listings in our areas went from 555 in July 2004 to 1,008 this year, nearly double the inventory."

"'Most of the loan programs that were available before the credit crunch are still available,' said Brian Bushlach, a senior adviser with Alpine Mortgage Planning. 'But the underwriting requirements and credit score requirements have been raised. It’s almost like the old-fashioned mortgage — you have to have a job and good credit.'"

"Avery said the days of 'aggressive pricing' — in which the seller could set the price at a high level and most often get it — are gone."

"If prices stagnate for a few years, or even go down, it’s all part of the correction process, Avery said. 'It’s more a process of adjusting to prices where they need to be,' she said."

"While other areas of the country could see severe drop in home values, Avery said she doesn’t predict the same for this region. 'I don’t think that will really affect us here in this slice of heaven,' she said."

The Oregonian. "Lime Financial Services rode the housing boom to considerable heights, growing from 30 employees in 2003 to 450 last summer. The Lake Oswego-based mortgage lender was frequently cited as one of Oregon's fastest-growing companies."

"Today, Lime boasts a far more modest claim to fame -- it is not dead. Lime agreed in April to be bought by deep-pocketed investment bank Credit Suisse. The deal makes it one of Oregon's last subprime mortgage lenders still operating despite an unprecedented meltdown of the U.S. mortgage industry."

"'I've been in this business for 30 years, and I've seen a lot of cycles,' said Rick Baldwin, whose own subprime lender, Meritage Mortgage, closed up shop in November. 'But none this bad. This makes every other downturn pale in comparison.'"

"By late 2006, the industry's looser standards had reaped a predictable harvest of unqualified homebuyers and unpaid mortgages."

"'I call it the race to idiocy,' said Ken Perry, whose Broker Knowledge Group offers classes for mortgage professionals. 'The more you loosened the guidelines, the more people got into homes, the more money everyone made. But it was unsustainable.'"

"A painful truth of the industry implosion is that it was in large part self-inflicted. In their zeal for a piece of the red-hot housing action, lenders created loan products far beyond the pale of traditional banking."

"More than a dozen mortgage professionals interviewed for this story agreed that some of the most fundamental gauges of financial prudence were relegated to the round file."

"Traditionally, lenders didn't extend a home loan to someone if the mortgage payment would exceed 28 percent of their monthly income or would push their total debt payments to more than 36 percent of their income."

"In the new era, some lenders accepted debt-to-income ratios as high as 65 percent. Likewise, the traditional down payment went by the wayside. Instead of requiring borrowers to put up 3 percent to 10 percent of a home's price tag, some lenders cheerfully made loans equal to 100 percent, or even 125 percent, of a home's value."

"'It got out of hand,' Baldwin said. 'Everybody knew in the back of their mind what was happening. But it was just too good. It was just too good.'"

"The day of reckoning finally came. In 2006, homeowners began to default on mortgages in larger numbers. The institutional investors who bought the mortgages from Wall Street exercised their rights to demand that mortgage wholesalers such as Lake Oswego's Sunset Direct Lending buy back nonperforming mortgages."

"'We were facing $20 million in buyback demands,' said Frank Frazzitta, Sunset Direct co-founder. 'That was more than we had in capital.' Sunset Direct, which had 125 workers at its peak, closed in March."

"Since January, 2,372 mortgage professionals have withdrawn their state registrations, a 20 percent decline, according to Dave Tatman, administrator of the Oregon Department of Finance and Corporate Securities."

"Mortgage industry veterans, meanwhile, argue that they were the victims. 'There were a lot of people who lied to get into homes,' Frazzitta said. 'We've seen every kind of fraud that you can imagine.'"

"Optimists hope the worst is past. Others aren't so sure, noting the wave of adjustable home mortgages scheduled to tick upward over the next two years. That could mean new defaults, delinquencies and foreclosures."

"'You can't bounce back from this until the adjustable-rate mortgages wash out,' Perry said. 'If people can't refinance, they can't keep their houses.'"