United Liberty

During Tuesday’s debate, John McCain discussed briefly a plan to spend $300 billion taxpayer dollars to transform households in foreclosure into FHA guaranteed fixed-rate mortgages. Yesterday afternoon, he followed it up with an e-mail to supporters (of which, I am not, but I like to keep abreast of general asshattery) that gave us a link to follow to learn more. I took him up on the offer, and I decided to take a look at real numbers to put the plan in perspective, since $300 billion taxpayer dollars is a pretty lofty sum for someone else to promise.

A typical foreclosure timeline is outlined for us by the State of Ohio, where a home can be foreclosed on and sold 150 days (approximately five months) from date of first delinquency. I have compiled statistics on foreclosures for the past seven fiscal quarters, which dates back to January 1, 2007, a time well before cries of a “crisis” were heard. To give the distressed homeowners and John McCain the benefit of the doubt, I chose to use a source whose business is getting people to use their product to purchase a home or investment property, RealtyTrac. Naturally, you would assume that this company would be on the “high end” of estimates, since numbers of this magnitude across the country would be difficult to track, AND it is in their best interest to show that the foreclosure market is booming.

Here are the RealtyTrac numbers for the year of 2007, and quarters 1 and 2 of 2008:

2007 - 1,285,873 (Interesting side note: CNN Money estimates that 405,000 homes were actually repossessed by lenders in 2007.)
2008 Q1 - 649,917
2008 Q2 - 739,714

Since the third quarter statistics are not yet available, I thought it would be fair, after all of the benefits I have given to my doubts, to select a number that is larger than 2008’s second quarter by the same percentage that the second quarter exceeds the first quarter. My math is as follows:

2008 Q3 = (739714/649917) x 739714 = 841,918**

If you find that method to be unacceptable, I will be happy to rework this article once RealtyTrac has released the third quarter numbers for 2008. For now, it is a figure I will use and note as an estimate. The last seven quarters have yielded a TOTAL of 3,517,422 homes in foreclosure in the United States. To put that in perspective, according to a Census Bureau release in 2004 (another statistic benefiting the homeowners and Senator McCain due to its age) shows the total number of households in to be 113,146,000. This means that in the last 21 months, 3.1% of American households have been faced with foreclosure.

Keep in mind that the figures I have used to illustrate the size of the “mortgage crisis” are largely “benefit of the doubt” numbers. When you take into account that the plan would not include the approximately 1 million properties already repossessed by banks, 2008 household data, and the qualifiers in place by the McCain Resurgence Plan, how small is the percentage of households being given a handout by this plan?

Given that the projected cost is $300 billion and that there are about 300 million Americans, what could you do with the $1000 that could be forcibly seized from your wallet?

**This figure is an estimate as RealtyTrac has yet to issue a press release of the 2008 third quarter figures.