At first glance, the numbers that Dr. Christopher Cagan works with on a daily basis look scary – especially when he’s talking about billions and trillions of dollars.

Despite so many zeroes and commas in his numbers, however, Cagan assured industry professionals attending a recent meeting of the Real Estate Research Council of Southern California that those very long numbers will have little impact on the national economy, although they will pack quite a punch for the people most immediately affected by them – lenders, borrowers and investors.

“This will not break the economy or the lending industry,” Cagan said. “This is part of the business cycle, but it does not control the business cycle. We’re in the 17th year of the current 15-year business cycle.”

Based on his latest property surveys (conducted December 2006), the Director of Research and Analytics for First American CoreLogic concluded in his latest report titled, “Mortgage Payment Reset: The Issue and the Impact,” that marketplace remediation has already begun as borrowers and lenders negotiate refinances whenever possible.

Confirming what RealtyTrac has reported previously, Cagan noted that it is borrowers who went with either sub-prime loans, or loans with smaller teaser rates initially to finance their home purchase, who stand to bear the greatest burden as the onslaught of foreclosures continues for years to come.

Equity is the primary issue involved. Homeowners who bought during or before 2003 should have plenty of it — enough, at least, to be able to refinance out of a less than desirable loan situation. It’s the loans with teaser rates and sub-primes that pose the much higher risk of foreclosure, and Cagan’s numbers bear that out.

When all is said and done Cagan is estimating that of the 8.37 million adjustable rate mortgages (ARMs) originated between 2004 and 2006 (valued at approximately $2.2 trillion), only 1.1 million of them will result in foreclosure caused by resetting interest rates. Total value of those loans: $326 billion.

Cagan estimates total non-recoverable losses caused by reset-based foreclosures spread out over five to six years to be $112.5 billion (about $20-$22 billion per year). In a $12 trillion national economy where mortgage lending is responsible for roughly $2 trillion per year, that loss translates to about 1 percent of total lending — so not a very large impact overall.

Still, Cagan’s report has plenty of numbers that are welcome news to real estate investors, homebuyers and real estate professionals seeking bargain real estate to invest in. Based on two alternate scenarios on the future direction of the market, Cagan’s report estimates that if real estate prices continue to drop, then 70,000 more foreclosures will be created for every 1 percent of drop. Conversely, the second scenario says that should home prices rise, then 70,000 fewer foreclosures will be created for every 1 percent rise in prices.

Either way, Cagan’s numbers are another tool for members of RealtyTrac to have in hand when seeking real estate bargains around the country.