How many people in the US have an outstanding home mortgage - any kind?

Question

If you take the one trillion or so dollars we've spent or seem ready to spend bailing out wall street and divide it equally among every American who has a mortgage and require them to use the money to pay down the mortgage, wouldn't that put a lot of liquidity into the market and be a better deal for taxpayers? The mortgage companies could be required to lend the money back out within 120 days or so, making more homes available. Better than giving to the banks, eh?

Answer 1

Best Answer - Chosen by Voters

Always better.

Answer 2

I have been looking for similar data. I believe that mortgage defaults are a scapegoat for what is really happening in the financial world.

Let's just say that there are approximately 112 million households in the US (based on census data for 2008). If we assume that the home ownership rate in this country is 75% (the historical average over the last decade is much lower), then there should be about 84,000,000 people who own their home. According to a 2001 study by the Census Bureau and the Department of Housing and Urban Development (HUD), "nearly 40 percent of all residential properties in the United States, owner-occupied and rental units, are not mortgaged but are owned free and clear." This has most likely gone up over the last few years, but if this is anywhere close it leaves approximately 50,400,000 homes with some form of a mortgage on their home.

Lets assume that banks typically recover around 75% of a defaulted mortgage (remember that mortgages still have an asset backing them up, even if its value is declining). Now lets also assume that the average mortgage is $200,000 (also an aggressive number). That would mean that the $700 billion bailout proposed would allow for $50,000 per home on 14 MILLION homes.

That is 28% of all homes in America that have a mortgage associated with it. Call me crazy, but I can't see how this bailout is "really" only associated with home mortgages as is commonly espoused by the media and politicians. How many people do you know that have foreclosed and handed over their homes to the bank? Is it 28% of your friends and family?

Answer 3

I agree with the logic. I think it addresses all of the problems that have been stated and it bails out the real people that were affected. Where as bailing out the financial industry does nothing to relieve the pressure on people that are in too far over their head. Remember, the loose policies of the mortgage industry is what caused the housing prices to rise to a bubble in the first place. So everybody paid more for their home than they should have because so many people were in the market that shouldn't have been. By using the money to pay down people's mortgage, people would have more equity so their loans would no longer be high risk. Then, they could refinance that equity so that their monthly payments were more affordable which would both get the financial markets going again and save people from losing their home. By the way, in my neighborhood which is newly built since 2004, about 10% of the homes have been abandoned. My gripe is that Bush's proposal only helps the people that created the economic crisis. It does nothing for the people impacted by it.

Answer 4

Well... using Skeptic's numbers, 700 billion divided among 50 million mortgages is only $14,000 each...

Not a whole lot of help!

Answer 5

75,515,104 out of 127,895,430 owner occupied housing units or 59%

How we got into this economic mess is brilliantly explained by Barry L. Ritholtz in his article: A Memo Found on the Street. His blog is at http://bigpicture.typepad.com

You can find the full text of his article A Memo Found in the Street here: http://online.barrons.com/article/SB122246742997580395.html

A sensible plan put forth by one Bill King should be considered

http://bigpicture.typepad.com/comments/2008/09/an-alternative.html

Please write Washington D.C often at http://www.congress.org

Source(s):

U.S. Census Bureau 2007 American Community Survey