AIG, Bailout, BankofAmerica, BearStearns, Citigroup, Congress, Credit Default Swaps, Derivatives, EMC, FannieMae, Federal Reserve, Foreclosure Crisis, Fraud, Freddie Mac, HOEPA, JP Morgan Chase, MERS, Note Mortgage, RESPA, Robo Signer, Securitization, Sub-Prime, TILA, Title Insurance, UCC, Wells Fargo
How big is the mortgage crisis? Pick an adjective: astronomic, colossal, enormous, gigantic, ginormous, humongous, jumbo, mammoth, massive, monstrous, mastadonic, monumental, prodigious, tremendous, vast, very big, very large, whopping. Here’s how big it is. Let’s assume that you’re reading these words one day after I wrote them. That means that:
By the time you read this, there will have been approximately 8,500 foreclosure actions in this country  – more than one thousand every hour during the working day.
By the time you read this, homes in the United States will have lost more than $13 million dollars in value.  During a 24-hour day, this figure comes out to more than $500,000 an hour.
By the time you read this, homeowners will have paid $750 million in mortgage payments for non-existent housing value– that is, the amount on their mortgages that disappeared when the bubble burst – according to our estimate. 
By the time you read this, the nation’s bankers will have earned nearly $400 million, of which $56 million will be bonus money.  Bankers like to say they work 24/7. (They don’t, but let’s say they did.) That means they will have collectively earned more than $16 million in salary and more than $2 million in bonuses during each and every one of the 24 hours hours before you read these words – morning, noon, and night.
And all of these figures for the last 24 hours will be reached again during the next 24.
Federal Spending vs. the Mortgage Crisis
How do the deficit and the mortgage crisis compare economically?
Here’s a fact for you: The amount of wealth American homeowners have lost over the least three years is much larger than this year’s entire Federal budget.
Even our conservative estimate shows that the debt that homeowners are paying off to the banks for no-longer-existing home value – “money for nothing” – is greater than the entire projected Federal deficit for 2011.
Those figures could be a little misleading, since they compare a multi-year problem with a single year’s Federal budget. So let’s look at the mortgage crisis and its impact on 2011. This year’s estimated “money for nothing” payments dwarf the annual spending cuts that Washington’s fighting over right now:
They’re greater than this year’s projected savings from the President’s spending freeze, and much greater than the $30 billion in additional spending cuts which House Republicans initially demanded (and which they’re likely to get.)
What is the “Homeowner Bank Bailout”?
The first column represents my quite rough (but very conservative) estimate of the payments that consumers will make to banks in 2011 for home value that’s evaporated. That’s money to repay loans which banks often knew were likely to go bad when they issued. (If they didn’t know, they should have.) After their generous bailout (which was must costlier than has been acknowledged), the banks are still collecting payments for that portion of the loan that covers assets which no longer “exist.”
That amounts to an additional, invisible annual bailout every year for the US banking industry, funded by some of the people who can least afford it: struggling homeowners.  (This figure doesn’t even include people who’ve been foreclosed upon, which means the bank got to keep everything they’d paid into the house – and got the house, too.)
The “homeowner deficit” is strangling the country as the financial sector drains money from the overall economy for its own non-productive coffers. This chart illustrates that by showing that banks are once again grabbing an unhealthy share of our national wealth: