Taxpayers will ultimately pay back losses of nearly $400 billion due to foreclosures

"Fannie and Freddie losses are passed onto taxpayers," said Anthony Sanders, a former professor of real estate and finance at Arizona State University, now with Virginia's George Mason University.

Most foreclosures now are on loans that were issued by banks but backed by Fannie Mae and Freddie Mac. Created to boost U.S. homeownership, the Federal National Mortgage Association and the Federal Home Mortgage Corp. buy from banks and now own half of all mortgages.
 
"I understand why some people want to walk away, but we should all understand who ultimately pays the bill for foreclosures," said Amy Swaney, former president of the Arizona Mortgage Lenders Association and Arizona manager of Citywide Home Loans. "Most foreclosures end up costing us all."

Those federal entities' losses are expected to near $400 billion before the foreclosure crisis ends, many of those losses could end up hitting taxpayers. Big investors included government pension funds and other public agencies.

"If the federal government begins bailing out pension funds," Sanders said, "then the taxpayer pays for that, too."
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