Pittsburgh missed the housing bubble and so far has dodged the residential real estate crash, but chances are we will not escape the wide reach of the credit crunch.

While real estate is local, lending is not.

Mortgage lending has no state boundaries and the credit crunch is a national -- as well as international -- crisis that has devastated many financial institutions that provide critical sources of cash for home buying.

"The credit crunch will absolutely affect Pittsburgh," said Michael Sichenzia, chief operating officer of Dynamic Consulting Enterprises in Deerfield Beach, Fla., a firm that renegotiates mortgage debt for distressed homeowners. "What happens at a bank in California effects the availability of mortgage money for a borrower in Pittsburgh.

"When you have a tremendous tightening of guidelines which determines who gets credit and who doesn't, that has an effect on borrowers regardless of where they live and the dynamics of that particular real estate market."

The long-term effect of the credit crunch will likely make it more difficult for the next generation of homebuyers to participate in the American dream of homeownership.

With major financial institutions reporting startling losses and staggering writedowns due to the subprime mortgage turmoil, many banks have become especially cautious of who they lend to.

Tougher lending standards will require mortgage borrowers to have higher credit scores and more money for down payments. Lenders will want to make sure the money used for down payments has not been borrowed from another source and they'll verify the borrower's income.

The federal government recently introduced a plan to provide some relief for the rising tide of subprime borrowers who are facing foreclosure.

The plan would freeze adjustable interest rates for certain buyers and accelerate loan refinancing for others. It hopes to help deserving debtors who have been making timely payments and avoid aiding those who really can't afford their homes.

Paul Brahim, executive vice president of BPU Investment Management, Downtown, said he doesn't believe the mortgage relief plan will help as many people as it might appear because the net isn't cast wide enough.

"But I'm not sure the net can be cast wider though," Mr. Brahim said.

"How do you say to the millions of homeowners who saved for a down payment and bought only as much house as they could afford and made all their payments on time that we'll forgive all the homeowners who didn't do that? We'll forgive all the irresponsible lenders and borrowers?

"The government is between a rock and a hard place as to how much it can do," he said. "It has to do enough to stabilize the economy without alienating responsible borrowers."

Some of the country's largest mortgage lenders, such as Countrywide, have an increasing backlog of loan applications in their pipelines that they've been slow to fund because they can't find a place to sell them in the secondary market.

"There's still a tremendous backlog because banks are suspicious of each other," Mr. Sichenzia said. "There's a complete reevaluation of risk from bank to bank. We have not flushed out all of the losses inherent in these portfolios of loans because we have not flushed out the fraud factor.

"Stated income loans led to misrepresentation of income and loan value and because of that the mortgage paper is still suspect. The result is you'll have tougher lending standards and that doesn't bode well for first-time buyers. The harder you make it for first-time buyers to buy a house the more inclined they are to rent and remain renters longer. And that does not bode well for Pittsburgh or America as a whole."

Barry Habib, CEO of Mortgage Market Guide, a leading advisory, training and market monitoring service, said Pittsburgh didn't participate in the housing boom because it lagged in employment.

Because job growth has been slower, incomes have risen slower too. But the good news in Pittsburgh is real estate is still affordable, he said.

"Pittsburgh won't escape the effects of what happened," Mr. Habib said. "But it's still more affordable relative to other parts of the country where homes are still overpriced.

"If I have a home in Pittsburgh and I'm living there, I have to feel pretty good that the chances of my house declining precipitously are very slim whereas other parts of the country are much more vulnerable."