“Mortgage-backed obligations held by Federal Reserve Banks…guaranteed by Fannie Mae, Freddie Mac, or Ginnie Mae” [1]. Not mortgages. It’s a subtle difference. But a big one, given the top tranches of mortgage-backed securities never faced a solvency (versus a liquidity) problem.
Fed means Federal Reserve. Not the federal government. The Fed and federal government are meaningfully different.
It acts in essentially the same manner as 'Bank of England' or the 'ECB' just structured a bit differently.
The Fed's massive intervention in 2008 was similar to other Central Banks, because it's effectively the same thing i.e. 'governance'.
The Fed's intervention to 'buy mortgages' is not a 'market response' - it's a 'government response'.
The intervention was mostly related to buying mortgages (however they ares structured is secondary) and is de-facto a bailout of Home Owners, who, if they were subject to normal market conditions, would have faced massive foreclosures, and, would have destroyed home prices for everyone else, furthering the calamity.
That the mortgages on the Fed's Balance sheet were not 'the worst' of the assets is a bit of a side show - in 'current market terms' they were all toxic we know that because nobody wanted to buy them, which is why the Fed had to do a 'non market intervention'.
If they were not basically 'garbage' at the time, the Fed would not have had to intervene to buy them.
As a result, the Fed hold's a giant pile of 'mortgages'.
In the way Sudafed is meth. Agency MBS’s never faced solvency questions. Unrated mortgage-backed securities and whole mortgages did. You are argued the Fed bought toxic crap off banks. It didn’t. It bought the cream of the crop, giving banks liquidity with which to address the rest.
The difference between mortgages and agency MBSs is entry-level finance. You don’t need to know it. But you should understand your circles of competence well enough to know not to debate it.