Fed’s Agency MBS Purchases Total $69.5 B

The Federal Reserve Bank of New York on Thursday announced just under $16.84 billion in new agency mortgage-backed security purchases for the week ending Jan. 28. It claimed $5.346 billion off Freddie Mae (FRE)‘s balance sheets, $7.19 billion from Fannie Mae (FNM) and $4.301 billion from Ginnie Mae. Altogether, the Fed has purchased — or at least agreed to purchase; not all transactions are final yet — approximately $33.5 billion from Freddie, $27.4 billion from Fannie and $8.6 from Ginnie, bringing total purchase to about $69.5 billion, just less than 14 percent of its total $500 billion purchasing power. The Federal Reserve on Nov. 25 first announced the program to purchase the direct obligations of government-sponsored entities — a $100 billion reserve for GSE debt comes on top of the total purchasing power — and Federal Home Loan Banks, as well as mortgage-backed securities backed by Fannie, Freddie and Ginnie. “This action is being taken to reduce the cost and increase the availability of credit for the purchase of houses, which in turn should support housing markets and foster improved conditions in financial markets more generally,” Fed officials said in a media statement announcing the program. The Federal Reserve may soon begin modifying mortgages it owns within the mortgage-backed assets it has purchased from government-sponsored entities, according to a letter written Tuesday 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. See the transactions posted on the Fed’s site. Write to Diana Golobay at 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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