This last spring new-home sales jumped 16 percent -- the biggest percentage increase since 1993 -- but despite the positive news, sales and construction activity may not have hit bottom yet because the U.S. Census Bureau reported new single-family home sales rose from a seasonally adjusted annual rate of 844,000 in March to 981,000 in April.

This data flies in the face of predictions of doom and the lowering of prices around the country. It seems that this cycle will seem more like a dip than a wave because the information on prices flew around the market via the Internet, causing people to adjust their behavior and modify their listings.

Another way to look at things is as follows. Any time inventory disappears, homes that come on a healthy market disappear fast, which takes down the average listing time. This causes people to put inventory back on the market at increased prices. Inventory disappears when the average time on listing goes higher than around 60-70 days. People keep watching the right indicators - waiting for the bottoming out of inventory.

Realty Trac released its May 2007 U.S. Foreclosure Market Report on June 12, showing a total of 176,137 foreclosure filings - default notices, auction sale notices and bank repossessions - during the month of May, were up 19 percent from the previous month and up nearly 90 percent from May 2006. Home sales prices were falling, with a saturated supply of for sale signs. All this pushes new homes prices down.

Ultimately it is the responsibility of the broker or loan officer to determine if the borrower can indeed make the monthly payments. The problem with many of these default loans is that loan officers encouraged people to exaggerate their ability to pay while the lenders abetted the deal by allowing these highly suspect loans to be funded. Investors, companies and people who buy the loans from lenders, also suspended disbelief, that overleveraged people with weak credit histories deserve a loan, and bought the collateralized debt obligations that the loans are based on. Many loans are packaged into large CDO packages designed to spread the risk and allow single large transactions instead of hundreds or thousands of single loan purchases.

Mortgage brokers and banks typically start their interviews with those seeking a home mortgage lender by asking about the person's credit in general, then working their way to the critical question: What is your Social Security Number (SSN)? They need to do it this way because the rate sheets are divided between credit and collateral. When looking at credit, most mortgage brokers take three things into account: credit - meaning the probability that a borrow will pay up; collateral which is the value of the property which ultimately acts as a guarantee of last resort for most loans; and monthly payment capacity.

However there are new companies such as Dogtor Paco, Inc. doing what's is known as the frictionless loan, which starts off with mortgage quotes and moves quickly to the loan application and an electronic submission. The conditional letter of approval (CLA) details the steps to close the loan. If the initial submission is denied, Dogtor Paco will help users select and resubmit to alternative banks that will do the loan. The goal here is to lock the loan transaction to processing within two hours after the start of the loan application.