USCM predicts $166 billion gross domestic product loss from foreclosures

A report from the Washington-based U.S. Conference of Mayors (USCM) predicts that the recent increase in foreclosures will result in a $166 billion loss to the gross domestic product and a $45 billion loss for the 10 cities hit hardest by the crisis. USCM is proposing a combination of public education and legislation against predatory lending to address the issue.

According to the report, which was released Tuesday, the high foreclosure rate will slow the gross metropolitan product for 128 cities by 2 percent in 2008. There will be 524,000 fewer jobs created next year, and $6.6 billion in tax revenues will be lost in 10 states as a result of the crisis, USCM says. “Today, the foreclosure crisis has the potential to break the back of our economy, as well as the backs of millions of American families, if we don’t do something soon,” says USCM President and Trenton, N.J., Mayor Douglas Palmer.

USCM also released a document recommending that cities organize ad campaigns to inform borrowers about counseling services to modify loans; increase the number of counselors available to borrowers; and educate young people about housing loans. The organization also wants the Federal Housing Administration to be reformed so it can help more borrowers, and USCM supports legislation to prevent predatory lending and other forms of loan abuses. The report is available at www.usmayors.org.