The Federal Reserve says it will begin purchasing up to $500 million in mortgage backed securities in beginning this January under a previously announced plan to purchase up to $600 billion of thee assets.
The program was announced in late November as another step in fighting a credit crunch. "The program is being established to support the mortgage and housing markets and to foster improved conditions in financial markets more generally," the Fed said (I am a poet and didn't know it) in a statement. The program will buy troubled assets from Fannie Mae and Freddie Mac, two government sponsored enterprises taken over by the treasurer earlier this year, and securities backed by Ginnie Mae, a guarantor of mortgage debt.
The central bank has already begun purchasing up to %100 billion in mortgage backed securities on its own and will buy up to %500 billion more through investment firms.
The new efforts are part of a move to restart consumer credit markets, to get more liquidity and bring down borrowing costs for the housing market.
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