Investment News - The Leading News Source for Financial Advisors

Study: Expect two million foreclosures by 2009

• 
• 
• 
• 
• 

By Aaron Siegel

October 25, 2007 4:37 pm ET

There are likely to be more than two million subprime-mortgage foreclosures by 2009, according to a report by the Congress Joint Economic Committee.

The JEC report entitled, "The Subprime Lending Crisis: The Economic Impact on Wealth Property Values and Tax Revenues, and How We Got Here," also estimated that $71 billion in housing wealth will be lost and states will lose $917 million in property tax revenue due to foreclosures.

Furthermore, more than $32 billion in housing wealth will be indirectly destroyed by foreclosures, which subsequently reduces the value of neighboring properties, according to the report.

The report, which was released by Joint Economic Committee Chairman Sen. Charles Schumer, D-N.Y., along with Sen. Amy Klobuchar, D-Minn., Sen. Sherrod Brown, D-Ohio, Carolyn Maloney, D-N.Y., called on the White House to increase foreclosure-prevention counseling, to encourage loan services to negotiate affordable loan modifications with borrowers and allow Freddie May and Fannie Mae to provide more funding to mortgage lenders.

"The current tidal wave of foreclosures will soon turn into a tsunami of losses and debt for families and communities," said Sen. Schumer, according to a statement.

"The administration must act quickly to save financially-strapped families from drowning in this flood of subprime foreclosures."

• Email
• Print
• Share
• RSS
• Reprint