I am faced with a tough challenge: To inform you about how the national rise in sub-prime loan defaults is going to affect you locally. I've worked in the mortgage industry for several years, and I've funded many loans. I've seen this market hit highs and survive lows. Let me be your resource as you want to know about this rapidly changing market. I'm here to help.

While the national media outlets are reporting the facts, they often miss the underlying story. I want to help you understand the story. Here are some of the key points I believe you are considering, and I will try to clarify them for you:

1) 100% financing options are likely to be available only to those borrowers with the most pristine credit. This will impact affordability in all areas as the number of potential borrowers decline. That means good credit is more important than ever for those who want to become borrowers. Consumers don't really understand what impacts their credit scores. They don't know there are some straightforward ways that I can help to increase those all-important credit scores. Please feel free to call for more information.

2) A risky loan by today's lending standards in one in which the borrower has a credit score below 620. These borrowers have proven to bring more risk to the table than those with higher scores. That doesn't mean they can't get a loan, but the days of the easy sub-prime loan with a high loan to value are over. Borrowers with less than perfect credit should consider expanded approval loans. Many of these are backed by Fannie Mae, and reward borrowers by lowering the interest rate after 24 consecutive months of timely payments. An FHA loan is another loan these borrowers should consider. These loans are tried-and-true and have been overshadowed in recent years by more exotic mortgage products on the market. Tougher documentation standards will be required. Borrowers will be asked to at least state their income and in many cases they will also be required to provide the documentation to support it. Liquid reserves will also be necessary.

3) Home values are going to be affected by rising defaults. Depending on the severity of the rate of loan defaults, it may have a significant impact on our local housing valuations. Banks don't want to hold on to defaulted properties. They want to get them off their books. That means they will sell at a discount. We saw this in the early 1990s when there was a rise in foreclosures and a subsequent decline in property values.

If you are shopping for a mortgage, don't fall for promises that seem too good to be true. The day of "low-low" rates and no money down loans are quickly evaporating.

If you would like to learn more about your existing situation, please call Jeff Kutnick from First Rate Lending at 949-215-9400 or email him at jkutnick@firstratelending.com or visit www.firstratelending.com