1. The RE market is clearly in a down cycle after an unprecedented run up in values on both residential and commercial. Some of this was attributable to the rediculously low interest rates post 9/11/01 that were still in effect in 2004-06. Most speculate that the recovery will begin in 2010.

2. Commercial has historically trailed residential in the cycles primaruly becuase underwriting is significantly different. A residential purchase is based soley on the purchasers ability to pay the debt. In commercial, the income of the property is of primary importance although the new strange world we are in is making buyers personal information much more important. Expect the other shoe to fall as commercial real estate is suffering from severe withdrawel from the credit markets and many assets have loans coming due that lenders are not comfortable refinancing which will cause them to default.

3. Property Values will continue to fall for the remainder of the year varying by region. If we can ever get to the "bottom" of this cycle, we can expect values to flatten out in 2010 an optimistically see values rise in 2011.

4. Institutional losses are hard to discuss in just a single paragraph. Much of the crisis is the result of out of control institutions such as banks and our friends on wall street that completely overlevereaged their assets and found out that when the market turns even slightly lower, if your overleveraged, it can be catastrophic. Commercial real estate for example, is typically leveraged at 3 to 1 meaning for every dollar invested, $3 are borrowed, Our friends at Fanne Mae and Freddie Mac were leveringing at 1,000 to 1, bless their little hearts.

5. While the government bailouts have certainly addressed the lack of liquidity for banks, the underwriting for loans continues to be extremely cautious making it difficult for even good borrowers with high FICO scores to get loans. It will take time, but once the banks truly get their finacnial houses in order, lending will return to some sembalnce of normality. Again look towards the end of this year and into next year.

6. The culprits of the bubble range from the low end where many ordinary folks bought houses they simply couldn’t afford and had no business ever buying. This was permissiable by the aforementioned low interest rates and the willingness for banks to lift reasonable and normal requirements for lending. This was facilitated because the secondary market that purchase loan originartions from the banks were relentless in their pursuit of these loans since they were so profitible. They in turn would happily package thses loans as securities and have our friends on wall street sell them for even more exorbitant profits. Once values starting going down and people couldn’t afford to pay their loans, this whole web began to unravel.

7. Fraud in its most literal meaning was not actually committed by borrowers because the banks basically turned their head when the borrowers "stated" they made significantly more money than they actually did and were not required to prove it. Unscrupulous mortgage brokers took advantage of this and put alot of people into homes and loans that again they had no business being in.

8. Sorry, but I’m not sure I understand your question regarding conflicts of interest.

9. The excesses of the lending institutions were noted earlier. Because they had a very willing partner in the secondary market to buy the loans they were originating, they kept lending willy nilly.

10. The reason the US residential crisis has had such an impact on the world economy is again in part due to the excessive overleveraging that went without oversight. This had a domino effect on the financial centers of several countries who do large amounts of business with the US. Just look at how much money AIG has paid out to foriegn banks from US tax dollars. Its a shame.

Your questions were very insightful and I hope I was able to shed some light on some of them. They all warrant significantly more detail then what is allowable in this forum. Keep soliciting the opinions of as many smart people as you can!!