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This paper  aims  to  quantify ,the  impact  of  the  decline  in  US  home  prices, the  increase  in  mortgage  credit  losses,  and  the  associated  reduction in credit supply on real GDP growth.  Using a state-level panel analysis,  we  first  estimate  the  link  between  home  prices  and  foreclosures.  We ,estimate  that  an  additional ,10%  home ,price  decline from ,mid-2008  levels  would ,be  consistent ,with  total  residential mortgage,credit losses over the years 2007-2012 of $636 billion, although the uncertainty is high.   We  then  try  to  gauge  the  impact of the credit losses on the supply of credit from banks, asset- backed security markets, and the government-sponsored enterprises (GSEs), and the knock-on effect on real GDP growth. In our central scenario, we estimate that the crisis could lower real GDP growth in 2008 and  2009  by  an ,average  of  1.8  percentage  points  per  year.   This assumes that the GSEs continue to expand their mortgage,book ofbusiness aggressively,  an  outcome  that  has  become  more  likely  following,the  measures ,announced ,by  the ,U.S.  Treasury  on  September 7,  2008.   If  instead  the  GSEs  stopped  expanding,  the

Beyond Leveraged Losses: The Balance Sheet Effects of the Home Price Downturn