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The Supprime Lending Crisis: The Economic Impact on Wealth, Property Values and Tax Revenues, and How We Got Here; Report and Recommendations by the Majority Staff of the Joint Economic Committee, Senator Charles E. Schumer, Chairman Rep. Carolyn B. Maloney, Vice Chair, October 2007

Key messages and key findings in the report:

• There is a growing awareness among policymakers and financial market
  regulators that we need to prevent the continuing foreclosure wave from affecting the broader economy.
• Unless action is taken, subprime foreclosure rates are likely to increase as housing prices flatten or decline, and the effects of the subprime crisis are likely to
  extend beyond the housing market to the broader economy.
• The decline in housing wealth will negatively affect consumer spending, and the forced sale of large numbers of homes is likely to negatively impact the prices of other homes.
• Unless action is taken, the number and cost of subprime foreclosures
  will rise significantly. For the period beginning in the first quarter of 2007 and
  extending through the final quarter of 2009, if housing prices continue to decline, we estimate that subprime foreclosures alone will total approximately 2 million.

• Assuming only moderate housing price declines, it is estimated that:

  Approximately $71 billion in housing wealth will be directly destroyed through the
  process of foreclosures.

  More than $32 billion in housing wealth will be indirectly destroyed by the spillover
  effect of foreclosures, which reduce the value of neighboring properties.

  States and local governments will lose more than $917 million in property tax revenue
  as a result of the destruction of housing wealth caused by subprime foreclosures.