$500 Billion Mortgage Relief for Responsible Homeowners

A program to be undertaken by the Federal Reserve will allow for the purchasing of direct obligations of housing-related government-sponsored enterprises (GSEs) including Fannie Mae, Freddie Mac and the Federal Home Loan Banks. The Fed will also purchase mortgage-backed securities backed by Fannie Mae, Freddie Mac and Ginnie Mae.

The motive for these actions is to make credit for home purchase more available and more affordable, in light of the widening spreads of rates on GSE-guaranteed mortgages and GSE debt.

Specifically, the Federal Reserve will conduct the purchase of up to $100 billion in GSE direct obligations and up to $500 billion in mortgage-backed securities (MBS), which will take place over the course of several quarters. The direct obligations purchases are to occur through a series of competitive auctions with the Fed’s primary dealers. MBS purchases, meanwhile, will be determined by competitively selected asset managers.

Additional details on the program’s operation will be available after consulting with participants.