CDOs, MBSs, CMBS, CMOs

PPIP Update March 2010

Posted on Sunday, April 25, 2010

In the recent second quarterly summary, a reported $10 billion in real estate assets gone bad have reportedly been purchased so far using the federal governments Legacy Securities Public-Private Investment Program (PPIP) unveiled last year to remove toxic mortgages from the system. That’s triple compared to the $3.9 billion last quarter as of the end of 2009. There are 8 funds participating now. Like other programs, this ones been off to a slow start but it may not matter since private investors are increasingly interested in these assets even without the government sticking its nose in. Treasury will invest up to $30 billion.

About 88% or $8.8 billion are non-agency RMBS. Of those, about half are Alt A. 12% or $1.2 billion are CMBS. Its too early into the 3 year investment timeline to know what the return will be but so far the highest is above 20%.

Treasury estimates $25.1 billion total purchasing power including $6.3 private capital which Treasury has matched dollar for dollar and provided another $12.5 billion debt capital.


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