Virginia mortgage rates and industry news

If your only source for mortgage news is television or CNN, you probably have no idea what's going on in the mortgage industry.  You still see Di tech and countrywide commercials on a daily basis, letting us know how "smart" people are, or hear that the Government is stepping in to "freeze" ARMs and crack down on "liar loans" but what's really going on behind the scenes?

Every week it seems I get guideline updates on MAJOR revisions from the big mortgage giants who undoubtedly are cutting something back or doing away with an entire product line altogether.  I'm not even talking about sub-prime lending, which is all but a memory now.  I'm talking about borrowers that I could finance just a week ago (mind you, with great credit, employment and assets) I can no longer help.  Sadly, our industry is now fueled by fear, foreclosures, a weakening dollar, and a nervous stock market.  "Common sense" underwriting, a term that was so overused by so many (think of the phrase "out of the box") is hardly uttered these days...

What does this mean to you, the savvy real estate consumer?   

Buying a home?  There's plenty out there...and at great prices, but "easy" financing has all but disappeared.  Buyers should be prepared to have the following:  Down payment; good to excellent credit; reserve assets; stable employment, low debt structure, taxable income.  Rates are still decent, historically speaking, but your rate will be overwhelmingly determined by your down payment or equity, credit score, and loan size. 

Selling a home?  There's never been a worse time, unfortunately.  Your beautiful home is now being compared to the "short sale" or "foreclosure" down the street in terms of price and quality, so you will have to give a lot more away just to compete. 

THE BIG QUESTION:  If it's too hard to sell a home in this market, and it's getting much harder to secure financing to buy a home anyway, how will the cycle be broken? 

Your kind thoughts, please?