Yesterday the Federal Housing Finance Agency (FHFA) released its updated projections of the cost of rescuing Fannie Mae and Freddie Mac. These estimates update projections last made in October 2010. The big headline has so far read that costs have been revised lower. But will that really be the case?

If one digs into the revised numbers, a few striking facts emerge. First, FHFA states losses since October 2010 have been lower than projected for a variety of reasons, including that “foreclosure delays [have] pushed some defaults into later years” and “net interest income is higher … due to lower interest rates.” The first reason just sounds like a delay of the ultimate cost to me, rather than a reduction. And given that homes often lose value during the foreclosure process (who bothers to maintain a home he is going to lose ?), these foreclosure delays are just as likely to increase the ultimate costs, even if they do delay those costs.

On the interest rate question, first, do we believe rates are going to remain low indefinitely? Seems to me we could easily be in a situation in three to five years where the GSE funding costs are above their interest income. This especially becomes the case if Obama has his way and Fannie/​Freddie re-finance a large share of their book into lower rates.

All this aside, the revisions are still a brutal reminder that taxpayers have so far sunk $169 billion into Fannie and Freddie, more than the ultimate costs of the TARP and more than the cost of the savings-and-loan crisis. The FHFA projects that, by the end of 2014, total taxpayer costs will be between $220 billion and $311 billion.

Any way you slice it, Fannie and Freddie have been a massive drain on taxpayers. The sooner we put an end to these entities, the sooner we can avoid having taxpayers pick up the dime for the next housing bubble.