October 28, 2007 (LPAC)--The Joint Economic Committee of Congress (JEC)'s Oct. 25 report on the U.S. mortgage blowout says that American households will lose $100 billion in their housing "wealth" by the end of 2008, and another 2 million of them could lose their homes to foreclosure.

But the JEC, headed by Sen. Charles Schumer (D-NY), is being way too optimistic about the wreckage from the mortgage bubble collapse, say economists like Jon Haveman, former senior economist of the President's Council of Economic Advisors. "Things are getting exponentially worse. Home prices have only now started to drop. They have a ways to go," Haveman told the San Francisco Chronicle.

The JEC estimated that California families would lose about $24 billion as prices fall and foreclosures surge, but they're reckoning on home price drops reaching 8-10% at most by the end of 2008, as the National Association of Realtors does. But national median home prices are already nearly 10% below their January-February 2007 peak, and year-to-year drops that large will be reported by the end of this year. At the JEC's recent hearing, housing economist Robert G. Shiller told them he was modeling a 20% national home price fall, historically a completely unprecedented development. And Shiller acknowledged, that it could get worse than that.

Schumer's JEC report also says that states around the country will lose about $1 billion in tax revenue; an unrealistic figure considering that Florida, for example, is in special legislative session because it has already sprung a $1 billion tax revenue hole due to the mortgage meltdown.

Worst are the recommendations for action in the JEC report: boosting foreclosure-prevention counseling; allowing Fannie Mae and Freddie Mac to purchase more mortgages temporarily; changing the bankruptcy code to let homeowners choose "bankruptcy rather than foreclosure"; fighting predatory lending practices, eliminating pre-payment penalties.

These proposals were all introduced in Congress in August and September; none have been enacted; and none would stop the foreclosure wave. Schumer personally forecasts 15,000 foreclosures in New York City next year, and can see first-hand that major international banks, holding mortgage-backed securities, are foreclosing from afar with no possibility of "negotiating a refinancing." In fact, in Cleveland, the biggest forecloser is Deutsche Bank--with no office anywhere in Ohio--with nearly 600 foreclosed homes, and 40-50 more every month. Deutsche Bank is also the biggest forecloser in New York City.