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Is the Mortgage Market Too Tight? Or Just Right?

The message from the National Association of Realtors today, or at least from its chief economist as he released lackluster sales results for October, is that the mortgage market is now largely to blame for the lack of a real recovery in housing.

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"What is important is the access to credit. We believe that many qualified home buyers that want to stay well within their budget are being denied credit because of the overly stringent underwriting standards of today's market," said Lawrence Yun in our usual post-news release interview.

Yun is right that the leaders of Fannie, Freddie and the FHA are touting the quality of their most recent books of mortgage business. FHA Commissioner David Stevens even said it in an interview with me last week that "the 2010 book is the best book in FHA history." He is clearly quite proud of that; Yun claims that's the problem.

It's a bold assertion, I have to admit. Lax underwriting is almost entirely to blame for the biggest housing crash in U.S. history and for the ensuing crash in the greater economy and banking sector. Banks gave away mortgages like toasters with very few questions asked. Fannie, Freddie and FHA played in that to a degree as well, as they tried to keep up with private-sector competition. Everyone has already admitted it over and over.

Now, barely a few years later, and as reform of the mortgage market is still in the works, the realtors are saying the market has gone too far; the fact that the last two years of mortgages are performing better than ever means that lenders have become "overly stringent." Yun claims there are plenty of responsible potential borrowers out there, ready to eat up all that bloated inventory—but they can't get loans, so they're out.

He also points to a statistic in today's report that 29 percent of all buyers in October used all cash. That is historically very high. I would also point out that nearly 20 percent of buyers were investors, who are all working in cash today because if it's hard to get a mortgage on your first home, it's next to impossible to get loans for multiple investment properties.

So here I sit, trying to determine if what Yun is saying is totally outrageous in this day and age of licking our wounds, or if he has a point.

Are mortgage lenders throwing the baby out with the bathwater? Have they made underwriting suffocatingly stringent to the detriment of recovery? Or is this exactly what we need today to stabilize the housing market, minimize new loan delinquencies and bring investor confidence back to the mortgage market?

I'm sure you all have thoughts on this...

Questions? Comments? RealtyCheck@cnbc.com And follow me on Twitter @Diana_Olick