Treasury sells last of mortgage-backed securities it bought during crisis

New homes for sale in Doral, Fla. A year ago, as housing-market conditions began to improve, the government began selling the mortgage-backed securities it bought during the worst of the financial crisis in 2008 and 2009. ALAN DIAZ / Associated Press
New homes for sale in Doral, Fla. A year ago, as housing-market conditions began to improve, the government began selling the mortgage-backed securities it bought during the worst of the financial crisis in 2008 and 2009. ALAN DIAZ / Associated Press
Posted: March 20, 2012

The Treasury Department has sold the last portion of $225 billion in mortgage-backed securities purchased primarily from Fannie Mae and Freddie Mac when the financial crisis was at its worst in 2008 and 2009.

Sales of the securities for $250 billion last week netted the government $25 billion in interest, Treasury reported Monday.

Some financial experts said the profit realized could be a sign that efforts to stabilize the mortgage market might not be as expensive as had been predicted in fall 2008. The government began selling its securities a year ago, after determining that market conditions were improving.

Treasury originally intervened in October 2008, with the government authorized to purchase up to $700 billion of "illiquid," primarily subprime, loans extended to buyers whose credit was poor or who could not verify their income.

At the time, the government said it was attempting to close the gap created by private investors leaving the securities market in the aftermath of the financial system's meltdown in September 2008.

By last March, however, the government had determined that its overwhelming presence in the mortgage-backed securities market was deterring private investors from returning.

"The successful sale of these securities marks another important milestone in the wind-down of the government's emergency financial-crisis-response efforts," said Mary Miller, Treasury's assistant secretary for financial markets.

Monday's announcement coincided with other news signaling some improvement in the housing market: A report by the National Association of Home Builders that builder-confidence levels this month were unchanged from February and that the attitudes of residential builders toward the future of their businesses remained at the highest level since June 2007, when the market was still quite strong.

"Many of our members continue to cite obstacles on the road to recovery," said chief economist David Crowe, "including persistently tight builder and buyer credit and the ongoing inventory of distressed properties in some markets."

Contact Alan J. Heavens at 215-854-2472 or aheavens@phillynews.com, or follow on Twitter @alheavens.

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