In 2005 and 2006 Michael Burry argued in letters to Scion Capital clients that the mortgage market would melt down in the second half of 2007, badly damaging the economy.

Test: in letters to Scion Capital clients written in 2005 and/or 2006, Burry predicted that the mortgage market would melt down in the second half of 2007 and that the meltdown would substantially damage the economy. - True: the letter text (originals, or reliable quotations) contains a mortgage-market collapse prediction timed to the second half of 2007 (or explicitly to late 2007, or to adjustable-rate mortgage resets in that window) and warns of broad economic damage. - Mostly true: the letters predict the meltdown with timing that is close but less precise (e.g., '2007'), or they mention the economic damage only briefly. - Mixed: the letters predict a mortgage meltdown but give no timing, or they give the timing but do not mention economic damage. - Mostly false: the letters express bearishness on subprime mortgages but contain no meltdown prediction of the kind described. - False: the 2005–2006 letters contain no such prediction, or predict something materially different.

Set before the research began.

1. E1 Scion Capital's 2006 Letter to Shareholders GuruFocus · 30 December 2015

   “Since the Funds-shorted mortgage pools mostly originated in spring through late summer 2005, I expect the pools shorted will see maximum stress during the latter half of 2007.”

2. E2 Conviction Amid Mark-to-Market Losses on the Subprime Short (Burry Q3 2006 letter, unofficial translation page) valuebeast.co.kr · 1 September 2006

   “But the fundamentals on those positions we are short are rapidly deteriorating, and during 2007, the reward for our patience should be made clear in the Funds’ performance.”

3. E3 Conviction Amid Mark-to-Market Losses on the Subprime Short (Burry Q3 2006 letter, unofficial translation page) valuebeast.co.kr · 1 September 2006

   “As most of the mortgages underlying the tranches we are short face interest rate resets six to twelve months from now – along with a reported $1 trillion in other mortgages during 2007 - these mortgages have not yet entered their highest risk period.”

4. E4 Conviction Amid Mark-to-Market Losses on the Subprime Short (Burry Q3 2006 letter, unofficial translation page) valuebeast.co.kr · 1 September 2006

   “The market in subprime mortgages is melting down right now.”

The excerpts from 2006 letters show Burry expecting "maximum stress" on the mortgage pools his funds had shorted in the latter half of 2007 [E1] and describing the subprime market as already melting down in 2006 [E4]. They do not clearly show a prediction that the mortgage market as a whole would melt down in late 2007. These short excerpts cannot show whether the 2005–2006 letters warned of economic damage, and none of the evidence comes from the 2005 letters.