I’ve also head 5% to 10% down payments will be mandatory for Alt-A loans.

The problem is that any tightening in standards only prevent future problems from continuing. The damage has been done. Had they enforced these standards 2-3 years ago things might be different – less foreclosures and lowerprices – but they didn’t.

As foreclosures rise banks will be stuck. They’ll need that bigger pool of buyers again to sell as close to loan value as possible, but they won’t want to sell to subprime borrowers, and may not even be able to.

I don’t see them going back on standards right away so foreclosures will increase, standards will tighten more, prices will plummet, and as people catch on to that, sales will slow more, prices will drop more, until prices are actually afffordable again. What a tragedy that will be!