Treasury GSE mortgage-Backed Securities Purchase Program

The Treasury GSE mortgage-Backed Securities Purchase Program

The Treasury purchased mortgage-backed securities of mortgages held by Fannie Mae and Freddie Mac in an effort to stabilize the market for MBS and stimulate mortgage lending. The program was started in Sept. 7, 2008 ended on Dec. 31, 2009 after purchasing about $220 billion of MBS and was authorized under the Housing and Economic Recovery Act. The securities have maturity terms of 15 and 30 years and Treasury may hold them to maturity, so the program balance will take some time to reduce to zero.

Funding agency and aid type
The funding agency was the Treasury Department.

Purchasing GSE mortgage-backed securities from investors.

Background
SIGTARP: “GSE MBS Purchase Program — Total Potential Support: $314 Billion. HERA also gave Treasury the authority to purchase GSE MBS in the open market, and Treasury announced the program on September 7, 2008. According to Treasury’s FY 2010 budget, “The function of the GSE MBS Purchase Program is to help improve the availability of mortgage credit to American homebuyers and mitigate pressures on mortgage rates. To promote the stability of the mortgage market, Treasury has purchased GSE MBS in the secondary market. By purchasing these guaranteed securities, Treasury sought to broaden access to mortgage funding for current and prospective homeowners as well as to promote market stability.”

Related SourceWatch articles

 * SIGTARP Quarterly Report to Congress July 21, 2009
 * Troubled Asset Relief Program

External resources

 * Making Home Affordable, US Dept of Treasury