Is this where the $700 billion figure comes from?

There are about 51 million first mortgages in the United States right now — but only about 1.4 million of them are either referred for foreclosure or in foreclosure, said Mortgage Bankers Association chief economist Jay Brinkmann. In other words, fewer than 3 percent of all American homes are in foreclosure.
http://www.npr.org/templates/story/story.php?storyId=94921465

If the average home is $1M and the bank can recover 50% of the value (or $500k and only recover 25%???) - that means $700B will in fact buy out all these bad mortgages.

I bet someday they'll reveal that's really where this stupid number came from.