The Treasury Department reported a $1.2 billion gain on troubled mortgage-backed securities it bought through the Public-Private Investment Program. In March 2009, the Treasury launched PPIP to buy residential and commercial mortgage-backed securities at a time when many financial institutions were struggling to unload them and raise capital. Through the first quarter, private-sector fund mangers raised $7.4 billion, which was matched by the Treasury. Including an additional $14.7 billion in U.S. debt capital commitments, PPIP held $29.4 billion in total purchase power at the end of the first quarter. Of the $7.3 billion of matched capital put up by the Treasury, $5.2 billion has been spent to buy troubled MBS. In a report released last week, the Treasury said those investments netted taxpayers $1.2 billion in unrealized gains as of March 31. If the $523 million in interest and principal paid back to the Treasury is included, the PPIP investments saw a 33% return. So far, the private fund managers drew down roughly $20.9 billion, or 71.2% of the total purchasing power. The Treasury broke down its MBS investments by product type in the graph below. PPIP bought roughly $17.7 billion of private-label RMBS and $4.4 billion CMBS. Subprime securities made up 11% of the residential securities, or $1.9 billion. Through the first quarter, the eight individual funds reported returns ranging from 22% to 51%. Banking analysts recently called the program a success that far and even called for a second round of PPIP to help buy-up assets in the shadow inventory of foreclosures. “We’re still in the program’s initial stages, but we are pleased with the returns we’ve seen thus far,” a Treasury spokesman said. Write to Jon Prior. Follow him on Twitter @JonAPrior.
Treasury earns $1.2 billion through legacy MBS purchase program
Most Popular Articles
Latest Articles
Kristen Sieffert leads the reverse mortgage presence at The Gathering
FOA’s president spoke about bringing reverse mortgages into the mainstream at the event in Scottsdale, Arizona.