It has taken longer than I thought it would, but someone has finally moved to take advantage of the potential profit waiting out there in the midst of the current mortgage mess.

With all of the bad news about subprime loans, the back and forth of the governments Troubled Asset Relief Program (TARP), and the overall economic malaise, all mortgages have taken on the attributes of skunks at a garden party. A commentator this morning estimated that banks may have to accept as little as $0.22 on the dollar to surrender their mortgages to the proposed bad bank. Yet the vast majority of homeowners are paying their mortgages same as ever; in full and on-time.

Now Invesco PowerShares Capital Management LLC, a leader in exchange-traded funds (ETFs) has filed registration statements to begin selling shares in two new ETFs focused on the possibilities in the mortgage market .

The funds, PowerShares Prime Non-Agency Residential Mortgage-Backed Securities (RMBS) Opportunity Fund and PowerShares Alt-A Non-Agency RMBS Opportunity Fund will be actively managed non-indexed vehicles that will invest, as the names imply, in prime and Alt-A mortgage-backed securities. Prime mortgages are those given to homeowners with good credit and adequately documented income. Alt-A mortgages are higher risk (but still considered safer than subprime) loans characterized by lower credit, smaller down payments, or non-documented debt and income.

Non-agency mortgages are those that fall outside the criteria set by the Office of Federal Housing Enterprise Oversight (OFHEO) to qualify as collateral for Freddie Mac, Fannie Mae, or Ginnie Mae securities.

The Prime Fund will seek to provide total return by investing at least 80 percent of its assets in securities collateralized by pools of Prime residential mortgage loans while the Alt-A Fund will do the same with pools of the less attractive Alt-A loans.

Exchange Traded Funds track an underlying index (such as the S&P) or a basket of assets. Even though EFTs look like a mutual fund, they trade like a stock on an exchange. Unlike mutual funds that are priced once, at the end of the day, ETF prices can change throughout the day. They also offer the flexibility of selling short, writing options, and so forth. EFTs that track an index are passively managed, but the two new funds that Ivesco is establishing will be actively managed.

Invesco anticipates that the new funds will realize capital gains when the mortgages are paid off or refinanced but will also see significant current principal and interest income as loans amortize.

Invesco PowerShares Capital Management LLC manages more than 130 exchange traded funds that trade both domestically and internationally. It had over $12 billion under management as of the end of the third quarter 2008. The companys EFTs trade on the New York Stock Exchange and NASDAQ