High risk mortgages helped a lot of consumers with risky credit purchase homes they otherwise couldn’t have afforded. But now with the housing market continuing to slump, the number of high-risk mortgage defaults is rising, and Kenneth Heeber says the economic damage from these defaults is only going to get worse.

[Editor's Note: Sir John Templeton first warned of housing crash – Read More Here]

In an interview with Bloomberg, Heeber, the manager of the top performing real estate fund over the past 10 years said, "We have a trillion dollars of subprime mortgages and we’re going to have huge defaults. If you’re looking at the housing market, it’s not the darkest before the dawn, it’s the darkest before pitch black.”

Delinquencies and defaults are already the highest in at least seven years.

Heebner, co-founder of Capital Growth Management LP, said the market for subprime loans could "shut down" as U.S. mortgage companies stop buying them. Just yesterday, Freddie Mac announced it was tightening its sub-prime lending standards and was no longer going to be buying high-risk mortgages.

Story Continues Below

He also said he disagreed with former Federal Reserve Chairman Alan Greenspan’s recent comments that slowing growth in profit margins was a sign the expansion might be winding down.

U.S. economic growth will slow, Heebner offered, but it will not go into a recession.

Editor's note:
Sir John Templeton first warned of housing crash – Read More Here
Why the dollar could crash this year.
5 Recession-Proof Stocks to Buy Now
Best way to insure your investments from a 2007 market crash.