SSS Favors Investing in Mortgage-Backed Securities

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Byline: MELODY M. AGUIBA

Instead of exposing itself to high-risk individual housing loans, the Social Security System (SSS) is considering investng in mortgage-backed securities (MBS) with housing entities like Pag-IBIG Fund or with commercial banks where it expects to earn higher return rates than government?s treasury notes can offer.

SSS President and Chief Executive Officer Corazon S. de la Paz said that engaging in MBS will reduce SSS's risks in extending housing loans that had brought SSS non-performing loans to the tune of P42 billion in the past. MBS, moreover, will be simpler since the pension fund will only have to deal with large institutions such as banks, real estate companies, or financing institutions.

Mortgage-backed securities are investment instruments that are guaranteed by the presence of housing titles or other property rights that can be offered by private or government institutions that have securitized their loan collaterals.

"What we would like to see in the future is for SSS to be more active in the secondary mortgage market. …