Many financial experts say the nation’s slumping real estate market is the result of the loose lending policies of the 1990s and into this century.

Back then, virtually anyone could buy a house with little or no money down, even with a lousy credit history and a poor income-to-debt ratio. The reason was simple: The lender was going to sell that loan to another institution and wouldn’t be around if the borrower defaulted.

But Frank Keating, president and CEO of the American Bankers Association says those policies have changed.
 
"There will be a responsibility if you didn’t underwrite that loan properly to take that loan back and basically swallow it yourself if you made the loan. So that certainly causes everyone to pause," Keating said.
 
Keating, who also is a former governor of Oklahoma, says home buyers also have a responsibility: Don’t borrow more than you can afford.
 
"The general rule of thumb is not to be obligated on a monthly basis to pay that mortgage payment for any more than one-third of the income in your pocket at the end of the month," he said. "Because you may have a roof that goes, you may have a furnace that needs to be replaced, you could lose your job or get sick."

You may have heard or read that home-ownership may be fading as a fundamental part of the American Dream, that many people are opting to rent. But Keating says that could be a mistake.
 
"With low interest rates, how long will that last? And certainly with low housing prices, how long will that last? This is a great time," he said. "But you need to recognize that this is a long-term legal obligation. You need to make sure you’re ready for it."

Keating says banks are more willing to lend but he says they are requiring more money down to buy a house.