Subprime Mortgage Crisis

Home Foreclosures Are On The Rise Across The Nation1

- More than 1.2 million properties received foreclosure filings in 2007; up 75 percent from 2006

- More than 1 percent of all U.S. households were in some stage of foreclosure in 2007; almost double the 2006 rate

- 1.3 million subprime foreclosures are predicted from the second the half of 2007 through the end of 2009

Subprime Foreclosures Come With Huge Costs to Local Neighborhood and the National Economy2

- Subprime foreclosures are expected to result in approximately $71 billion in lost housing wealth as each foreclosure reduces the value of the foreclosed home

- Subprime foreclosures are expected to destroy another $32 billion dollars in housing wealth by reducing the value of neighboring properties

- States are expected to lose more than $917 million in property tax revenue as a result of lost housing wealth due to subprime foreclosures

Significant Problems Have Spread into the Wider Housing Market3

- 5.6 percent of all mortgages – or more than 3 million American households – were more than 30 days delinquent nationwide in the third quarter of 2007

- The percent of mortgages delinquent for more than 30 days is at its highest level in more than 20 years

Broader US Economy Now Feeling the Drag of Housing Market Troubles4

- Declines in residential fixed investment subtracted almost one percent from GDP during 2007

- The number of new residential construction projects started has trended downward sharply for 22 months; economic downturns are frequently accompanied by downturns in the construction sector


[1]RealtyTrac Inc., “U.S. Foreclosure Activity Increases 75 Percent In 2007,” January 29, 2008. Available at http://www.realtytrac.com/ContentManagement/pressrelease.aspx?ChannelID=9&ItemID=3988&accnt=64847; Joint Economic Committee, “The Subprime Lending Crisis: The Economic Impact on Wealth, Property Values and Tax Revenues, and How We Got Here,” October 25, 2007, Available at http://www.jec.senate.gov/Documents/Reports/10.25.07OctoberSubprimeReport.pdf.
[2]Joint Economic Committee, “The Subprime Lending Crisis: The Economic Impact on Wealth, Property Values and Tax Revenues, and How We Got Here,” October 25, 2007, Available at http://www.jec.senate.gov/Documents/Reports/10.25.07OctoberSubprimeReport.pdf.
[3]JEC Calculations on Mortgage Bankers Association data.
[4]Bureau of Economic Analysis, National Economic Accounts.  Numbers are in 2000 dollars.  2007 figures are based on the Advance GDP release of the fourth quarter, 2007, Table 2; Census Bureau available at http://www.bea.gov/newsreleases/national/gdp/2008/pdf/gdp407a.pdf