Home prices continued their downward descent in November, falling 1% compared with October, according to the latest S&P/Case-Shiller Home Price Index of 20 metro markets. There are a variety of reasons that housing prices are down, including huge foreclosures inventories, high unemployment, and continuing tight credit. Fannie and Freddie also play a role in the slow-moving housing market.

Fannie and Freddie, the purchasers and insurers of 90% of the residential mortgages, are still heavily reliant on credit scores, many of which have plunged over the past two years. This is keeping some applicants out of the market who could be eligible if a low credit score were countered by a sufficient down payment, say 20%.

We need to remember that 30 percent of credit scores were impaired during the housing crash, meaning the economy withdrew 30 percent of housing applicants. If the housing is confined to only those with high credit scores, it will continue to be a slow recovery.