A look at some of the Fed’s support programs

Program to buy $1.25 trillion in mortgage securities from Fannie Mae and Freddie Mac. Goal is to drive down mortgage rates and bolster the housing market. Program is slated to end March 31. But the Fed could extend the program if it deemed the economy too weak. So far, it’s bought $970.2 billion of the securities.

–Program to buy about $175 billion in debt from Fannie Mae and Freddie Mac by the end of March. So far, $164.1 billion has been bought. This program also is designed to support the housing market.

— Program to provide low-cost loans to banks, called the Term Auction Facility. The Fed was lending an average of $38.5 billion over the week that ended Feb. 3. That program is slated to end March 8.

— Program designed to spark lending to consumers and small businesses at cheaper rates, called the Term Asset-Backed Securities Loan Facility, or TALF, for short. Use of that program averaged $47.3 billion over the week that ended Feb. 3. [Read the full article]

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Government controlled mortgage finance companies Fannie Mae and Freddie Mac said Wednesday they will buy back troubled loans contained in securities they have already sold to investors.

The two companies are repurchasing mortgage loans for which borrowers have missed at least four months of payments. At the end of last year, Fannie had about $127 billion of such loans, while Freddie Mac had about $70 billion.

The two companies guarantee the mortgage securities they sell to investors. Buying the delinquent loans back would cost less than making those guarantee payments, both companies said.

Fannie Mae, based in Washington, and its McLean, Va., rival Freddie Mac have been run under tight government oversight since they almost collapsed in September 2008. They have required $111 billion in federal aid to stay afloat. [Read the full article]

Fed Chairman Ben Bernanke was scheduled to testify on Capitol Hill this morning, but because the Capitol was frozen (by the weather, not just by filibusters) the hearing was cancelled. However, he did release his prepared testimony.

In general, in his remarks about monetary policy, Bernanke addressed the draining the huge amount of liquidity added to the system over the last 18 months or so, but he did not address the really is the most important question.

To my mind, when should be a long time from now. The key problem facing this economy is not inflation, it is very low rates of resource utilization. To tighten monetary policy when the unemployment rate is at 9.7% and U.S. factories are only operating at 68.8% of capacity would be dangerous and reckless. [Read the full article]

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The parent company of the Bank of Albuquerque said Wednesday it has purchased the rights from the FDIC to service $4.1 billion in Charter Bank's mortgage loans. BOK Financial Corp. (Nasdaq:BOKF) bought the rights to service the 34,000 loans, 75 percent of which are in New Mexico. Those loans are mostly held by Fannie Mae, Freddie Mac and Ginnie Mae. The acquisition will boost BOK’s mortgage servicing portfolio by 46 percent, to $11.5 billion, the company said. The actual transfer of the loans will take place in early April. In mid-March, customers will receive information on how to make their mortgage payments in the future. Loan servicing is essentially a bookkeeping function and most of the work on Charter’s loans will be done out of Tulsa, said Bank of Albuquerque Chairman and CEO Jennifer Thomas. “We are very excited to welcome 34,000 customers with mortgage loans in this book of loans,” Thomas said. [Read the full article]

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