[John aich]

...it ultimately the taxpayers?

[drwer2]

No. the taxpayers have nothing to do with it.

the mortgage holders finance the revenue bonds. the are the basis for the bonds worth in the first place.

an underwriter collects a set of mortgages with similar characteristics. (people with good scores, similar mortgage types and amounts).
then writes a bond that he will sell (essentially taking some of the profit off the top of the mortgage interest rate) and hedging it with the bond.

He pays off the bond holders dividends with the money taken from the rate slice.

This way the risk of loaning money in mortages is reduced by the income from selling bonds. its a more stable form of capital.

Not every thing with risk is guaranteed by taxpayers. only municipal, state and federal bonds are.

wer