NEW YORK (CNNMoney) -- When the dust settles, the federal bailout of Fannie Mae and Freddie Mac will be the most expensive government rescue of the financial crisis -- it already stands at $153 billion and counting.
Even as the Obama administration unveiled its plan for reforming the firms, experts agree taxpayer losses are going to continue to climb, no matter what Congress eventually decides to do with them.
The Federal Housing Finance Agency, the government body that oversees the two mortgage giants, has estimated that losses through 2013 will require Treasury to pour another $68 billion to $210 billion into the firms on top of the money already used to prop-up the firms and the housing market.
"Regardless of what they do, even if they were to change their status tomorrow, none of that will change the losses that will be coming due on their existing book of business," said Guy Cecala, publisher of Inside Mortgage Finance, an industry trade publication.
The two firms have already made many improvements in underwriting standards over the last two years, making most new loans they finance and guarantee more profitable and less risky, Cecala said.
"But that new business only goes so far, because it's still dwarfed by the loans made five to 10 years ago," he said.
Cecala thinks the losses may end up coming in a bit below FHFA's estimates, but other experts believe those estimates may be too conservative.
"The losses depend very much on housing prices, and I don't see the situation in the housing market getting very much better," said Peter Wallison, senior fellow at the American Enterprise Institute, a conservative think tank.
"As long as home prices continue to decline or even stay the same, the losses to Fannie and Freddie, and to the taxpayers, will continue to climb."
Congress essentially approved a blank check in July 2008 to back losses at the two firms, and in September of that year the government stepped in and took them over after finding that losses on the mortgages they bought during the the housing bubble had overwhelmed their net worth.
But while the government has kept the firms alive by pumping money into them since then, there has been no plan on reforming their operations going forward.
Friday the Obama administration unveiled its plan to slowly wind down Fannie and Freddie and have banks and the private sector provide the financing for home loans. But the administration plans call for some continued role for the government in promoting mortgage lending and home ownership.
Critics of the plan would like to see the government removed from the mortgage finance market altogether. But even advocates of that position say it will take a period of years to phase in that change.
And no one expects the legislative battle between the administration and Republicans in Congress over the future of the firms to be an easy one.
"The politics suggests to me there will be a standoff until the issue is settled following the election of 2012," said Wallison.
And working through all the bad loans could take even longer.
"You have to take your time and go through those loans and suffer the losses," said Cecala. He estimated that will take at least two or three years, maybe many more.
Ironically, many of the losses that Fannie and Freddie are expected to post in the next few years will go to pay Treasury a 10% dividend on the preferred stock it received in exchange for the bailouts.
Both firms are essentially borrowing money from Treasury to have the cash they need to repay Treasury. The dividend payments Treasury receives limits the losses to taxpayers.
FHFA estimates that between 40% to 90% of those additional bailout costs will simply be used to pay that dividend.
The National Association of Realtors is lobbying to end what it calls a "punitive dividend" and Jaret Seiberg, analyst at Concept Capital's Washington Research Group, said that structure is unworkable.
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