There are 10% of mortgages in default, but do you know how many houses have no mortgage?

The current stats tell us that 10% of mortgages are in currently in default.  What is often overlooked is the number of housing units in the US that don't have any debt attached to them at all.  About one-third of the homes in the US don't have a mortgage, otherwise known as "free and clear."

65% of housing units have a mortgage
10% of those housing units are in default
There are an estimated 128,000,000 housing units in the US according to the US Census Bureau
If 35% are owned free and clear, that's 83,200,000 homes with a mortgage.
If 10% of those mortgages are in default, that's 8,320,000 mortgages in default.

For comparison sake, 8.32 million is roughly equal to:

- All the housing units in all of Florida
- The number of downloads of Mozilla Firefox 3 in the first 24 hours it was available
- The number of copies of "Harry Potter and the Deathly Hollows" sold in the first 24 hours it was available
- The number of personal and financial records compromised by online security breaches in the first quarter of 2008
- The estimated number of tobacco deaths by the year 2030 (according to the WHO)
- The number of people who tuned-in to watch Britney Spears make her comeback on MTV's Video Music Awards

Because 8,320,000 is a big number, the US government is taking big steps toward helping the situation.  My only fear is that their efforts are simply delaying the inevitable.  If we could modify all the loans that are in default to make them affordable for the borrower, that's a good first step (although it seems unlikely). 

The bigger issue that isn't discussed regularly in popular media is the number of people who are so far underwater with their mortgage that they don't want to modify their loan unless the modification involves debt relief.  Simply stated, they aren't willing to face the consequences for what they now consider a bad investment.  Even though they can continue to pay under the original terms of the mortgage, they would prefer to bail.

If I invested $100,000 in the stock market and my stocks lost 50% of their value, should I be able to get my money back?  Of course not. 

It's scary to think about the precedent that is being set by essentially "rewarding" the people who are upside-down and not providing any incentive for the responsible borrowers to stay responsible.  If the only way to negotiate a loan modification is to stop making payments, we shouldn't expect the number of defaults to improve.