Over the past few weeks, the much acclaimed PPIP program has started to find its way into the news again. Billed as a savior to the much maligned non-agency MBS space, this idea by the Treasury was a relatively solid game plan to bring back liquidity.

During early 2009, very clean 15yr private MBS (think 2003-2004, highly seasoned, less than 1% total delinquencies) was trading in the high eighties to low nineties. Why is this significant? I will explain. Fresh off the credit collapse and stuck with every negative connotation, demand for this product was at an all time low. For the type of paper listed above, and other similar types, 20+% loss adjusted yields were available.