The current recession and housing crisis led to several fundamental changes in the marketplace; most notably a caste system within the mortgage finance market, according to two executives at Deloitte Financial Advisory Services. David Williams, chief executive officer, and E.J. Huntley, principal, said on the company's "Deloitte Insights Podcast" that certain financial institutions receive more funding because of their standing as credible lenders. This has created two tiers or classes of market players. "What we've seen over the last couple years of this recession is a bi-furcation in the marketplace," Huntley said. "We've got class A properties in the top tier markets, and we essentially have everything else." Banks and the debt market are highly focused on top tier lenders and effectively dealing only with their best customers. Williams said they are trying to establish quality, long-term relationships with lenders that have lower risk. "If you think about the notion that two-thirds of distressed property is either going to be commercial bank financed or securitized, and E.J.'s notion that folks are working with top tier properties, those are relationship driven activities," Williams said. "Building those relationships and coming with a viable solution is very important." Williams noted that the relationship between borrower and lender has also fundamentally changed in recent times. Lenders now have a more obligatory attitude towards borrowers that is unlikely to shift in the near future. "Gone are the days of the 100% financing deals for spec development, gone are the days of underwriting with high loan-to-value," said Williams. "We are going to see some significantly tightened lending standards. In fact, we're seeing them already." Both men agreed that the real estate market and general economy are both cyclical in nature and that this recession is not so different from ones in the past. Huntley said a number of common themes held true , such as the fact that real estate markets and values are highly dependent on jobs and consumer spending. But the Deloitte execs don't know how Dodd-Frank will change the marketplace and affect the bottom tier of mortgage lending. "What we do expect is an era of higher scrutiny, more regulatory oversight and enforcement for financial institutions," Huntley concluded. "What we don't know so much know is what the impact on the smaller community and regional banks, which is really where a significant of debt financing takes place for a lot of the assets that don't fall in the top tier class A bracket." Write to Christine Ricciardi.