Several days ago, courtesy of an analysis by JPM's Michael Feroli, we quantified that the implied "rents" benefit to the US economy arising from squatters not paying mortgages is about $50 billion per year, or just about 0.4% of GDP. Today, thanks to 60 Minutes, this number is about to soar, because if anyone didn't know before that paying mortgages is for suckers, now virtually every single mortgage borrower, and there are about 48 million of them, will think long and hard before mailing out the next mortgage payment. And if not all, then certainly the 11.1 million underwater mortgages will be one step closer to throwing in the towel on feeding the mortgage monster. Considering that 4.6 million mortgages are currently delinquent for 30 days or more, look for this number to at least double as everyone who is underwater says no mas to a losing game. Which of course is precisely what the banks want: consider that the "rents" benefit is about to double to $100 billion per year, all of which will accrue to the banking system first, then one can see why a $20 billion settlement deal is not a bad investment for the bank to generate a 2.5x ROI in a few short months.
Full 60 Minutes clip on Fraudclosure: