It is estimated that there are about $5 trillion of original securities created out of US mortgages - $700 billion gets you 14% of those, about what is to be expected to be the high-water mark for US homeowners defaulting and being foreclosed in the near future.
So $700 billion in bad loans, $700 billion bailout. Perfect, right? Not a chance.
Essentially ignored in all this is the probable trillions upon trillions of leveraged structured finance derivative securities whose value depends on the original securities.
Nobody really knows how much of these there are; one estimate put the number at around $25 trillion.