The U.S. Federal Bank of New York announced Monday it has started buying mortgage-backed securities in an effort to improve the troubled housing market. The program, initially announced five weeks ago, allows the Fed to spend $500 billion to purchase mortgage-backed securities guaranteed by mortgage giants Fannie Mae and Freddie Mac and another $100 billion to directly buy mortgages held by the two companies and Home Loan Banks. The program is designed to lower the price of mortgages and make home loans more available. The New York Fed is overseeing the program for the U.S. Federal Reserve, and up to $500 billion in securities will be purchased by the end of the second quarter. Mortgage-backed securities guaranteed by Fannie Mae and Freddie Mac are usually high-quality prime mortgages, not the risky sub-prime loans that sparked the current credit-market turmoil.
