The Federal Reserve Bank of New York on Thursday announced it had purchased another $22.3 billion in agency mortgage-backed securities in the week ending Feb. 4, an increase from the $16.8 billion purchased the week before. The new purchases bring the Fed’s total to $91.7, nearly one fifth of its total $500 billion purchasing power. The Fed took $9.7 billion off Freddie Mac‘s (FRE) books, $10.5 billion from Fannie Mae (FNM) and $2 billion from Ginnie Mae. It purchased securities primarily with 30-year maturities, but invested $950 million in securities with 15-year maturities and $553 million in securities with “other” maturities (20-year, 40-year, etc.) The Federal Reserve has selected JP Morgan Chase & Co. (JPM) as custodian for its mortgage-backed securities purchase program, the New York-based bank said in a press statement Tuesday morning. The program, which began on January 5, 2009, will purchase up to $500 billion in MBS that are backed by government-sponsored entities, in an effort to maintain liquidity in a vital section of the U.S. mortgage market. The Fed may soon begin modifying mortgages it owns within the mortgage-backed assets it has purchased from government-sponsored entities, according to a letter written late January by Fed chairman Ben Bernanke and addressed to Committee on Financial Services chairman Barney Frank, D-Mass. “The goal of the policy is to avoid preventable foreclosures on residential mortgage assets that are held, owned or controlled by a Federal Reserve Bank and that are subject to the policy through sustainable loan modifications and other actions that are consistent with the Federal Reserve’s obligation to maximize the net present value of the assets for the benefit of taxpayers,” the letter read, in part. Visit www.newyorkfed.org for further details. Write to Diana Golobay at [email protected]. Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.

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