This was devastating, not only to real estate agents, but also to everyone who relied on the real estate market. Title companies that earn fees based on the transactions alone and on the size of the transaction in dollars found themselves with massive reductions in cash flow. Business was down 50 to 75 percent, and many closed offices or dramatically cut staff, leaving one escrow officer to do the work of two or three.
Lenders were in full-scale panic. Offices closed. Names that had belonged to giants in the industry became fading memories. The credit crisis grew deeper and led to federal bailouts, beginning with the TARP funds and followed by many tweaks, as the government struggled to stimulate the economy. FHA-insured loans became the only vehicle available, and with its set limit, the market was immediately divided into two parts. The part that could get FHA financing grew to over 90 percent of the business, and the part that exceeded FHA loan limits became a cash-only wasteland, causing upper-class and luxury neighborhoods to suffer further.