The Legacy Securities Public-Private Investment Program (PPIP) undertaken by the government in an effort to stabilize the real estate market appears to be hitting pay dirt—for both investors and taxpayers.

According to the latest data released by the Treasury Department, Treasury’s equity in the program, begun in 2009, has grown 27%. While $9 billion in federal funds are still at risk, the eight asset funds who took up the government’s offer of low-cost loans to invest in troubled mortgage-backed securities have now accumulated, in aggregate, a total of $21.5 billion in commercial and residential mortgage-backed securities.

All eight funds made money by the end of 2010, even though almost half of the residential loans that make up 81% of the securities are Alt-A—loans to borrowers who usually have not disclosed either income or net worth. About 10% of the loans are subprime.

The program, designed as a buy-and-hold strategy, put up government (read “taxpayer”) money to encourage investment firms to buy the securities. Treasury committed $22.1 billion in debt and equity to the program, and fund managers and private investors also committed capital to the plan.

Eligible assets—securities issued before 2009 and originally rated AAA or the equivalent by two or more agencies, and secured with actual loans or leases—are available for investment with the loans, called public-private investment funds (PPIF). PPIFs run for a term of eight years, with the potential for renewal of consecutive one-year or, at a maximum, two-year terms.

Skeptics are still concerned about the viability of the program, but the firms who took the government’s offer are making out handsomely. Angelo, Gordon & Co. has seen a net return on its fund of almost 60%. Next in line was Alliance Bernstein, with a 37% return; BlackRock followed at 36%, and Invesco brought home a 31% reward for its investment.