For homebuyers waiting for mortgage interest rates and home prices to come down, their wish just came true, but only if they have good credit. For those requiring sub-prime loans, the market is only going to get tighter.

Several events are putting subprime lenders and their loans in the spotlight. Collectively, these problems may impact housing sales, inflating inventories and putting further pressure on prices.

• Home sales slowed and prices dropped in late 2006 and early 2007, putting more inventory on the streets than buyers could absorb. According to the National Association of Realtors, pending sales fell 4.1 percent, but that could be due to the unusual winter weather experienced in January throughout much of the country. This in turn put pressure on prices as competition between sellers increased, almost nationwide.

• According to Morgan Stanley research, 12 percent of subprime loans were delinquent in the third quarter of 2006, up 8 percent from the same period in 2003. Countrywide has seen a sharp increase in late payments to 19 percent of subprime loans from 15.2 percent at the end of 2005, the company told the Wall Street Journal.

• The growth of mortgage loan delinquencies and foreclosures alarmed Congress enough to hold a hearing into mortgage lending practices last month. Entities such as the Mortgage Bankers Association (MBA) testified that there was no evidence that increased delinquency rates and foreclosures were due to the use of non-traditional loan products such as hybrid ARMS, favored by sub-prime borrowers, but that non-prime borrowers have always had increased delinquency and foreclosure rates no matter what loan products they use.

• Between $1.1 trillion and $1.5 trillion in ARMs are due to reset in 2007. Of those loans, approximately $600 billion will refinance before resetting, avoiding payment increases for the borrowers. However, approximately $500 to $800 million in ARMs will reset. If mortgage interest rates are higher, the loans will reset at higher adjustable rates, putting pressure on more borrowers.

• Subprime lenders are having trouble. HSBC took large charges for unpaid loans in 2006. Fremont says it is selling its subprime unit after receiving a note from the FDIC that would restrict its sales of subprime loans to consumers. New Century is in serious financial difficulty, reporting that it is in default with several lenders that loan the subprime lender operating capital.

• Federal bank regulators are calling for stricter standards for subprime loans to get rid of the riskiest loans to borrowers, such as teaser loans -- low initial rates that quickly reset to no-limit interest rate increases.

• Home sales are expected to continue to decline. According to Freddie Mac's Conventional Mortgage Home Price Index (CMHPI), U.S. home prices appreciated 6.1 percent during 2006, which is the slowest calendar-year growth rate since 1999 when prices gained 5.4 percent, and it is much lower than the 13.3 percent annual growth reported in 2005. Frank Nothaft, Freddie Mac's chief economist projects home-price "appreciation in 2007 will be about one-half of last year's rate, or near 3 percent.

One analyst noted that if credit continues to deteriorate, underwriting will tighten, which will allow fewer buyers to purchase homes, which takes away part of an already declining market.