According to many seismologists, California is long overdue for a major earthquake, which would make you think that most homeowners in the state are insured for the next “big one.”

But actually, about 87 percent of homeowners do not have earthquake insurance -- and a new report from free-market think tank R Street Institute looks at what implications that might have on the national scale.

Fannie Mae and Freddie Mac own a significant portion of these uninsured mortgages in California, and according to the report they could stand to lose between $50 and $100 billion in the next earthquake. (Assuming that homeowners without earthquake insurance make the decision to walk away from their mortgages.) And because Fannie and Freddie are federally supervised mortgage finance institutions, the government may in turn bail them out -- meaning that financial cost would fall on taxpayers.

Will the next big financial crisis come from California’s “big one?’ Why has it been so difficult to get California’s homeowners to buy earthquake insurance? And what are some potential solutions to consider ahead of the impending earthquake’s financial fallout?

We are making a podcast about what would happen in Los Angeles and to the world if The Big One did hit and we would love your questions and stories. if you have questions about earthquakes, how FEMA works or just a story you’d like to share you can write to us. The email is TheBigOne@kpcc.org

Guests:

R.J. Lehmann, co-author of the report “Take a Load Off Fannie: The GSE’s and Uninsured Earthquake Risk,” which will be released Tuesday; he is the director of finance, insurance and trade policy at R Street Institute, a free-market think tank based in D.C

Glenn Pomeroy, CEO of the California Earthquake Authority

Daniel Farber, professor of law and director of the environmental law program at UC Berkeley