Did you ever get the feeling that things are much, much worse than you are being told?

For millions of innocent-bystander taxpayers being asked to backstop government-sponsored entities (GSEs) Fannie Mae or Freddie Mac, that feeling is about to become overwhelming.

It's a done deal that the government will have to inject capital, that is, your unbudgeted, future tax dollars, into both GSEs in amounts that will be worse by multiples than the Congressional Budget Office estimate of $25 billion.

That's right, you and your children will almost certainly have to pay big for the mortgage insanity of the last few years. And despite what government leaders say about using public money just to reassure nervous markets, it is highly likely that the money is not an insurance policy at all. It will be spent, and several times over.

Consider, for instance, that Fannie and Freddie are being allowed to continue their slippery accounting games.

Like changing accounting treatment of private label securities by making them Level III vs. Level II assets; altering servicing practices by allowing bad loans they used to buy out of mortgage pools to stay for up to 300 days vs. 90 days, previously.

And Freddie Mac is taking $18 billion in tax-deferred assets when the company admits it "does not maintain a tax basis balance sheet to support deferred tax accounting under GAAP," or generally accepted accounting principles.

So the mortgage banks will be allowed to play the "We'll raise capital when market conditions improve" game until the government ultimately takes control.

Will current equity holders get wiped out? It's likely.

James Lockhart, director of the Office of Federal Housing Enterprise Oversight, says at the end of March that Fannie and Freddie had credit outstanding of $5.3 trillion, including agency debt of $1.6 trillion and guaranteed mortgage-backed securities of $3.7 trillion.

A Business Week analysis puts the "fair value" of Freddie Mac at negative $5.6 billion on June 30, if it were marked to market. Investors might think it's worth more eventually, but that's hard to prove right now.

Freddie Mac, meanwhile, reported a second-quarter net loss of $821 million due to rising foreclosures and will slash its dividend at least 80 percent. Credit-related expenses doubled from the first quarter to $2.8 billion, and the company wrote down subprime and low-quality mortgage securities by $1 billion.

Fannie soon after reported a net loss of $2.3 billion, partly on a large increase in reserves and as a result of writedowns. It cut its dividend 86 percent to five cents.

By the first quarter, Fannie Mae "fair value" Tier 1 capital ratio was at 0.4 percent, compared to negative 0.2 percent for Freddie Mac. By July, the banks had raised $25 billion (including an announced but not yet completed $5 billion Freddie issue) against $11 billion in writedowns.

Meanwhile, the entities were allowed a new conforming loan limit of up to $625,000 instead of the prior $417,000, leading to unintended stress in the $4.5 trillion mortgage bond market.

Analysts say this change in the loan size would significantly change bond performance characteristics that dictate values and, possibly, hinder trading in the "to-be-announced" market.

That's because the larger the loan, the more apt it is to be refinanced when rates are attractive, thus boosting the expected pace of principal repayment ahead of maturity.

Faster-than-expected prepayments when rates are falling reduces the value of mortgage-backed securities.

Result: Even more uncertainty, just what taxpayers don't need right now, with their wallets on the line.