Mortgage bankers will foreclose on 8.1 million homes over the next four years, representing 16% of all outstanding residential loans in the U.S., according to a new report issued by Credit Suisse.

Back in April, Credit Suisse forecast 6.5 million foreclosures, or 13% of outstanding mortgages. The Wall Street firm says it favors a plan by Treasury to create a 4.5% mortgage using mortgage-backed security issuance but believes the agency "should target an even lower rate in foreclosure hot zones where entire neighborhoods are at risk."

Credit Suisse Managing Director Rod Dubitsky estimates that within two years 72% of consumers with a subprime loan — and 83% of payment-option ARM borrowers — will be in a negative equity position if home prices fall 15%. Dubitsky spoke at the annual housing forum sponsored by the Office of Thrift Supervision on Monday afternoon.

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