by Calculated Risk on 3/19/2007 11:54:00 AM

From the OC Register: Homeowners face foreclosure

The United States likely will see 1.1 million foreclosures during the next six to seven years on adjustable-rate mortgages issued when home prices were at or near the peak of the market, a study released today by First American Corp. of Santa Ana says.

As a result, lenders will end up losing about $112.5 billion.

But that probably won't have a significant impact on the economy or the mortgage industry since the loss equals less than 1 percent of the $12 trillion in home loans projected for the next six years, the study said.

"This is not going to break the economy," said study author Christopher Cagen, director of research and analytics at First American CoreLogic, a First American company. "It's less than the price of alcohol. It's less than the price of gasoline going up to $3.25 a gallon. ... It's part of the business cycle and it's not going to be dominant."

Compare this to the Center for Responsible Lending report: Losing Ground: Foreclosures in the Subprime Market and Their Cost to Homeowners.

"... foreclosure rates will increase significantly in many markets as housing appreciation slows or reverses. As a result, we project that 2.2 million borrowers will lose their homes ...
...
We project that one out of five (19 percent) subprime mortgages originated during the past two years will end in foreclosure. This rate is nearly double the projected rate of subprime loans made in 2002, and it exceeds the worst foreclosure experience in the modern mortgage market, which occurred during the “Oil Patch” disaster of the 1980s."

I'm trying to find the First American study.