The housing market could face an onslaught of new foreclosures if policy makers and industry professionals fails to develop more financing options that keep real estate investors active in the market, Amherst Securities Group said in a report Wednesday. The problem is two-fold, according to the analyst group. On one hand, the market needs to stifle a growing supply of distressed properties by implementing solutions — including principal write downs — that will save homes from distressed inventory pools. The second step is ensuring the market has multiple financing options available to investors who want to buy up the existing streams of distressed and existing real estate. "Rental yields are high enough to entice some amount of private capital, but financing for investor properties would certainly attract more capital and cushion further home price declines," the agency said in its Amherst Mortgage Insight report. Amherst Securities believes 10.4 million homes are still at risk of going into default after analyzing the number of loans that are currently classified as non-performing, previously delinquent and underwater. The tightening of underwriting guidelines also is making it more difficult for investors and homebuyers to get into the market to extract the access inventory. "It is increasingly difficult to obtain a mortgage, thus shrinking the pool of qualified applicants," Amherst wrote. "That shrinkage is a growing problem, which will be further exacerbated by the very narrow QRM (qualified residential mortgage) standards." In its current form, the proposed qualified-residential mortgage standard gives borrowers who put at least 20% down a chance to be exempted from the credit-risk retention rule, which restricts lending by requiring firms to hold 5% of the risk on securitized loans. Write to Kerri Panchuk.