American International Group has offered to buy for $15.7 billion mortgage-backed securities held by the Federal Reserve Board Bank of New York.

The high-yield instruments backed by residential mortgages were held before the fall of 2008 in AIG’s life subsidiaries and sold to the Fed to increase liquidity when it was struggling to stay in business.

The securities are being held in Maiden Lane II, an investment facility financed primarily by a loan from the Federal Reserve Bank of New York.

The original value of the securities when sold to the Fed was $20.5 billion. AIG officials said in the securities filing that, since the original transaction was executed in December 2008, Maiden Lane II has paid the FRBNY interest incurred on the senior loans and reduced the principal balance of the senior loans. The securities are now worth $15.9 billion, according to the filing.

“In addition, the value of the Maiden Lane II assets has increase,” the filing said.

According to an AIG securities filing late Thursday, if the Fed Bank of New York accepts the offer, the loans that the Fed Bank made to Maiden Lane II will be repaid in full, with interest, and the New York Fed will realize a profit of approximately $1.5 billion on its residual equity interest in Maiden Lane II.

In addition, according to the filing, the total outstanding assistance to AIG from the U.S. Government will be reduced by approximately $13 billion to a total of approximately $26 billion.

AIG is making the move to simplify its balance sheet and increase the yield on its investments in anticipation of beginning to sell off the government’s current 92.1% interest in AIG’s common stock, likely in May.

The NY Fed issued a statement this morning confirming that it has received the offer to repurchase the securities.

“The Fed has been aware of AIG’s interest in those assets for some time,” the statement said.

“Any decision on a possible disposition of these assets will be made in a way that maximizes the proceeds to the taxpayer and that is consistent with the goal of fostering financial stability,” the NY Fed statement said.