Fed sees MBS purchases beginning in January

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Dec. 31, 2008 - The Federal Reserve says it expects to open its program to purchase mortgage-backed securities in early January and reiterated those purchases will be limited to MBS backed by Fannie Mae, Freddie Mac and Ginnie Mae.

The program, announced in November, will only target agency securities. It's intended to reduce the cost and encourage the availability of credit for home purchases. Purchases of up to $100 bilion in GSE direct obligations are planned, along with purchases of up to $500 billion in MBS.

The Fed initially expected to begin the purchases before this year-end.

The New York Federal Reserve Bank has a Q&A on the MBS purchase program on its Web site. According to that information, the program will purchase only fixed-rate agency MBS. The program does not include collateralized mortgage obligations, real estate mortgage investment conduits, interest-only or principal-only trusts or other mortgage derivatives or cash equivalents.

The Fed says it has selected private invesment managers to act as its agents in this program.

Related Links

Program Q&A