US Taxpayers Make Profit from Mortgage-Backed Securities

According to IRS attorneys following the government’s handling of mortgage-backed securities, the United States Treasury has completed the wind-down of its mortgage-backed securities (MBS) portfolio. IRS tax lawyers explain the MBS portfolio was acquired by the Treasury Department as part of its response to the financial crisis. These same IRS tax attorneys observe that the portfolio appears to have produced an overall profit to U.S. taxpayers of approximately $25 billion dollars.

As many may recall, the U.S. Treasury invested $225 billion dollars in MBS during 2008 and 2009 through authority provided by Congress under the Housing and Economic Recovery Act of 2008. These MBS purchases supposedly helped “to stabilize financial markets and preserve access to mortgage credit during a period of unprecedented market stress”, according to Treasury sources. But many IRS tax attorneys and the public at large seem to feel the Treasury’s efforts provided little, if any real help to beleaguered homeowners struggling to hold onto their homes.

Over the past year, as part of the Treasury’s continued efforts to reduce emergency financial crisis response programs, IRS attorneys note the Treasury has been winding-down of its MBS portfolio. According to IRS tax lawyers, the Treasury had originally planned to sell up to $10 billion dollars in MBS principal per month, subject to market conditions. However, based on a recent Treasury report, IRS attorneys say the government has already completed its MBS sales and that, overall, taxpayers have received total cash returns of $250 billion dollars from its MBS portfolio through sales, principal, and interest. This suggests the Treasury made a $25 billion dollar profit over its initial investment.

According to Assistant Secretary for Financial Markets, Mary Miller, “the successful sale of these securities marks another important milestone in the wind down of the government’s emergency financial crisis response efforts.” Ms. Miller went on to say that “this program helped support the housing market during a critical moment for our nation’s economy and delivered a substantial profit for taxpayers.”

While all agree this news is good, IRS attorneys caution the economy is still hurting and that many taxpayers continue waiting for their personal financial situations to turn-around. For millions of Americans who are unemployed, or under-employed, IRS levies, IRS garnishment, and the need to file back tax returns are still a very real problem. IRS tax lawyers say the number of Americans in tax trouble continues to be high and will likely continue to be a source of concern as long as the economy flounders.


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