The article states "The Fed now owns almost a third of bonds backed by home loans in the U.S." which is where the headline comes from.
I think the reason why it's important is that owning 'mortgage backed debt' means you own an instrument sold by the mortgage underwriter rather than the mortgage itself. If the mortgage payer defaults and the underwriter fails you have no way of recovering the debt. A mortgage backed bond is tied to the actual property, so if the payer defaults you can sell the real estate to get the money back.
That might be completely wrong though. The extend of my financial education is watching The Big Short.
It is wrong, no offense. Mortgage backed debt is just a debt instrument payments from which depend on mortgage payments. It isn't debt issued by a business that has a bunch of mortgage loans on its books- those sorts of things don't exist anymore.
The mortgage industry is bewilderingly complex but short version is- most loans are almost immediately sold to Fannie or Freddie, not kept on the books of those who made them. Fannie and Freddie then securitize- make bonds out of combinations of those loans- a large portion, tho not all of loans they buy. The Fed is buying a lot of those bonds, probably generally the ones backed by the most risky payers, but the analysis is extremely nuanced.
That is why the Fed owns 1/3 of bonds, which (only) equate to 11% of total loan value. This prop on the market is much more powerful than 11% suggests.
I think the reason why it's important is that owning 'mortgage backed debt' means you own an instrument sold by the mortgage underwriter rather than the mortgage itself. If the mortgage payer defaults and the underwriter fails you have no way of recovering the debt. A mortgage backed bond is tied to the actual property, so if the payer defaults you can sell the real estate to get the money back.
That might be completely wrong though. The extend of my financial education is watching The Big Short.