The usual case for bail-out is that money for helping troubled lenders and borrowers will come out of the taxpayer dollars. This is not always the case.

For some, it can happen like the Senate voted in favor of an appropriations bill that earmarks $100 million to provide housing counseling for those facing foreclosure. This will be directly financed by taxes.

But with regard to Federal Housing Administration, the taxpayer dollars don't directly support the FHA’s loan insurance program. The premiums paid by homeowners with FHA loans do.

But moves to liberalize FHA loan guidelines concern some because the government would presumably step in if the FHA stumbles after taking too much risk.

With the credit crunch, the FHA softens the guidelines to make more FHA loans accessible to homeowners in trouble. A modernization bill is under consideration. This would allow the agency to insure bigger loans and loans with zero percent down.

Those provisions increase FHA’s exposure to riskier and more expensive loans. If lots of those loans become unsuccessful, some believes that government would step in and use taxpayer money to help FHA.

A member on the Senate Banking Committee, Richard Shelby(R-AL), said in a July hearing, "While the subprime market has witnessed considerable stress, the losses in that market are being borne by investors. Were these same losses to occur in FHA programs, it is likely they would be borne by the taxpayer."

Some proposals also call for higher limits on the amount of mortgage assets that Fannie and Freddie buy and keep in their own portfolio, and earmarking a portion of the raised limit for the purchase of subprime loans. . The agencies guarantee the purchase and trading of mortgages, which helps promote homeownership. Fannie and Freddie can't buy loans valued above $417,000 and some proposals call for an increase in that limit

Fannie and Freddie are "government sponsored," not government funded, but there is an implicit understanding that should Fannie and Freddie falter, the government would feel pressure to help out.

Some bills would impose a stricter regulation on mortgage lenders and brokers. The organization and management of such measure would cost the government money.

But even those who oppose tax-funded bailouts say more stringent regulations are a good idea but for some it's more about principle as it is about cost.

An economics and public policy associate professor Jacob Vigdor of Duke University in a paper critical of most bailout proposals wrote that "Government cannot stop the housing market from expanding and contracting, but it can make future contractions less painful ... [by holding] lenders and brokers to higher, more uniform standards during loan origination”

"Using government power to absolve borrowers or lenders of their responsibility, even without the direct use of taxpayer dollars, is likely to be costly to many, hurtful to the innocent and helpful to those whose avarice and overreaching contributed so much to the creation of this situation," Vigdor wrote.

One proposal, while directly tax related, is not likely to affect most taxpayers. The Mortgage Forgiveness Debt Relief Act (MRDA) would exempt homeowners paying income tax on any mortgage debt their lenders forgive. That would reduce federal tax revenue by an estimated $1.3 billion over 10 years, but another provision in the bill would actually raise more money, making the bill revenue neutral, according to the Joint Committee on Taxation.

That money-raising provision would reduce the amount of capital gains some second-home owners may exempt from tax when they sell that second home.

Some initiatives are not at all funded by taxpayer dollars. One example of which is the newly formed alliance among a select group of mortgage lenders, servicers and housing counselors. This was arranged by Treasury Secretary Henry Paulson. The alliance will bring together and coordinate the efforts of servicers and counselors to provide subprime loan "workouts." This can include lowering the interest rate on a loan, spreading out past-due payments over the life of the loan or a short-term repayment plan.

Another example is the Treasury-facilitated “debt rescue fund” financed by three major banks to improve liquidity in the short-term credit markets.

So it is not always the case. Government can help, work out and bail out the ailing subprime market without really directly funding programs with taxpayer dollars.