The likelihood that the government will do some type of takeover was increased following a report by the Mortgage Bankers Association last week that more than 4 million American homes- 9% of all homes with a mortgage- were either behind on their payments or in foreclosure at the end of June. A combination of $3.1 billion dollars was lost by Fannie and Freddie Mac between April and June. It is predicted that half of those credit losses are from loans with ballooning or adjustable monthly payments. It is also predicted that a government bailout could cost taxpayers $25 billion dollars according to the Congressional Budget Office which would make it one of the most sweeping government interventions in the workings of financial markets in U.S. history. Putting that in perspective, it is estimated that the airline bailout after 9/11 cost tax payers $15 billion dollars. Freddie and Fannie have played a larger role in the US mortgage market over the past year as the subprime and Alt A lenders have shut down. According to the trade publication Inside Mortgage Finance, the companies guaranteed about three-quarters of all new mortgages in the second quarter of this year, up from under 40 percent in 2006. It is thought that the government could place quarterly infusions of money (instead of one big capital investment) as losses warrant in an attempt to minimize the upfront cost of the rescue. According to MSNBC, placing the companies in conservatorship, rather than receivership, could signal that the government does not intend to nationalize or liquidate Fannie Mae and Freddie Mac. Instead, under the terms of a federal law passed this summer, conservatorship is designed to allow the government to restructure the companies and return them to private control. Treasury officials have previously compared the process to Chapter 11 bankruptcy. MSNCB further reports that if the government plan succeeds, uncertainty in the markets around Fannie Mae and Freddie Mac could subside, making it easier for the companies to get access to funding at cheaper rates. That, in turn, could have a spillover effect in the overall market for mortgages, lowering interest rate and helping the battered housing market recover.