The answer is larger than the local real estate agent whom you entrusted to sell your home.  They continue to diligently market your home using the internet, print media, open houses, the MLS and other promotional media. This promotional activity continues to attract buyers. Nothing new here.

Look much beyond your local market into to the financial capital markets for the answer. The money for the mortgage to purchase your home is not as readily available to borrowers as it was a couple years ago. We will not attempt to delve into explaining the capital markets. However, we will highlight briefly, where mortgage brokers and banks get money to lend to buyers.

The bank is but one party involved in providing money for the buyer loan. The mortgage broker, or bank where the buyer makes application and receives the loan, will pool millions of dollars of mortgages, in what they call “traunches” and sell the paper (loan) to a wholesaler who will through Wall Street brokerage firms create securities. These “traunches” are used to segment investor credit criteria and repayment risk. Investors purchase these mortgage backed securities, ultimately providing the money/liquidity back to the banks. These securities are an “IOU” to the ultimate investor who purchases the paper secured by the buyer mortgage.

Over the past few years, investors were caught up in the housing boom, loosening their credit requirements. This excitement provided “easy” mortgage money.

However, investor assumes the ultimate credit risk for getting his principal returned through the normal amortization of the buyer’s mortgage.

Now back to your home and why it is not selling.

These investors, due to the increasing mortgage default rates have abruptly tightened their criteria for buying these securities (which are backed by mortgages). This credit tightening criteria is ultimately passed on to the buyer. If the buyer now does not meet the tighter credit standards of the ultimate investor, banks will not approve new loans causing buyers to be unable to obtain financing.

This tighter underwriting criterion has drastically reduced the number of buyers able to obtain funding, which has created a housing bottleneck. Your home is now sitting on the market for that qualified buyer or for the markets to open up again.