by Tanta on 10/25/2007 09:51:00 AM

This is what we refer to in the risk management business as "interesting." From the New York Times:

In a new report to be issued today, the Joint Economic Committee of Congress predicts about two million foreclosures by the end of next year on homes purchased with subprime mortgages. That estimate is far higher than the Bush administration’s prediction in September of 500,000 foreclosures, which in itself would be a tidal wave compared with recent years. Congressional aides provided details of the report yesterday to The New York Times.

The Joint Economic Committee estimates that the lost of real estate wealth just from foreclosures on subprime loans will be about $71 billion. An additional $32 billion would be lost because foreclosed homes tend to drive down the prices of other houses in the neighborhood.

Those figures would cause a decline of $917 million in lost property tax revenue to state and local governments, which will also have to spend more on policing neighborhoods with vacant homes. The states most likely to be hard hit fall into two categories: those where prices had been rising fastest, like California and Florida, and Midwest states with weak economies, like Michigan and Ohio, where people with low or moderate incomes made heavy use of subprime loans to become homeowners and consolidate debts.

For those of you keeping score, back in October of 2006 Michael Perry predicted foreclosures "in the coming months" of around 2 million.

In December of 2006, the Center for Responsible Lending predicted 2.2 million foreclosures of subprime loans.

In March of 2007, First American predicted 1.1 million foreclosures in the next 6-7 years.

Anybody want to take 500,000 foreclosures by the end of 2007?

(Thanks, Clyde!)