Understanding $700,000,000,000.00

Look at that number. It’s amazing. Yet to hear our leaders talk about it, they need every penny to prop up the mortgage lenders. They don’t. And I figured out how to put it in terms anyone can understand:.

At first, I saw that number and I had to ask… How many bad mortgages are there? Then after playing with that hypothetical in my head I wondered, how many mortgages are there in active in the whole country? So I looked it up. According to this 2006 pdf from the U.S. Census, there are 33 million owner occupied dwellings with first mortgages active. (1)

Hmmm 700,000,000,000 / 33,000,000 = Over $21,000 cash the government could just give to everyone with a mortgage! What kind of stimulus would that have on the economy to hand 33 million people $21,000?

But then I took it to the next level… On page 174 of the pdf (page 158 of the doc) I found an interesting table. (2)

Click for full size.

I put the highlighted numbers into a spreadsheet to figure out just how many mortgages $700 Billion could retire if they gave the money (back) to the people. I got this.(3)


The Bottom Line: If the Treasury simply took the $700 Billion and started paying off taxpayer mortgages, they could pay off every mortgage in the country worth less than $75,000… Or put another way, $700 Billion could pay off well over half of all outstanding first mortgages in the entire country.

Do you really think they need this much money?

So I say we just take the cash and pay off half the mortgages out there and see what that does to the credit market and the economy. Are ya with me?

(1) Excluding Home Equity Lines of Credit and Second Mortgages.
(2) Reformatted a bit for readability.
(3) Used Averages of payouts so $10,000 – $20,000 I used $15,000 also used half # of mortgages (cell B:9) in $75K range to represent average.

Watching People Even Dumber Than Me On the Subject of the Financial Crisis
Size matters II