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View Full Version : how long will the fed stay out of the mbs market?



jk
01-24-10, 09:14 AM
the fed is supposed to end qe in march, and has said specifically that it will stop buying mbs. this should raise mortgage rates. simultaneously, this spring will see a sharp rise in mortgage resets for alt-a and specifically option-pay mortgages, many of which are likely underwater. how long will the fed stay out of the mbs market?

1. it won't actually stop at all.
2. 1 month
3. 3 months
4. 6 months
5 a year or longer

we_are_toast
01-24-10, 11:48 AM
With the government owning Fannie and Freddie, I'm wondering if there might not be ways around having to buy MBS' directly. The Fed knows about the implications of not buying MBS'. I think they've got something else up their sleeves.

jk
01-24-10, 12:25 PM
With the government owning Fannie and Freddie, I'm wondering if there might not be ways around having to buy MBS' directly. The Fed knows about the implications of not buying MBS'. I think they've got something else up their sleeves.
ok, fannie and freddie will buy mortgages. they will get their money from the treasury. the treasury will get its money by selling tbonds.... to the fed.

ThePythonicCow
01-24-10, 05:28 PM
ok, fannie and freddie will buy mortgages. they will get their money from the treasury. the treasury will get its money by selling tbonds.... to the fed.
I agree with jk, but I can't figure out how to map that to this survey. Does indirect Fed involvement in MBS count as involvement?

jk
01-24-10, 05:37 PM
I agree with jk, but I can't figure out how to map that to this survey. Does indirect Fed involvement in MBS count as involvement?
beats me, pc. i made up the survey before i realized that they would use fannie and freddie as ventriloquist's dummies. i originally voted 3 months, but now i think the answer is they'll never stop, but the gse's will be intermediaries. and of course the fact that the fed is no longer buying mbs will be touted as a great success in stepping back from q.e.:rolleyes: