by Calculated Risk on 12/31/2007 02:23:00 PM

From Stephanie Simon at the LA Times: Mortgage crisis takes a bite out of states and cities First, kudos to Ms. Simon for calling it a "mortgage crisis" and not falling into the subprime reporting trap!

Dozens of states, counties and cities across the nation will enter the new year facing deep and unexpected budget holes as the widening mortgage crisis cuts sharply into tax revenue.
...
The mortgage crisis cuts into tax revenue in several ways.

The most obvious victim is property tax collection. Homeowners in foreclosure don't pay taxes on time. And as foreclosures spread, property values drop -- dragging down assessments and collections.
...
Even more distressing to budget planners is the decline in sales tax revenue. If people aren't buying homes, they're not buying refrigerators and washing machines to furnish them.

There are many details in the article. And imagine what will happen if the economy slides into recession?

Also, the LA Times has an article on a mortgage fraud ring in Los Angeles hat apparently obtained $142 million in fraudulent loans: How a bank fell victim to loan fraud. An amazing story.