A trillion-dollar effort
The Obama administration and the Federal Reserve are winding down their efforts to keep mortgage rates at historic lows. Here are some of the tools they used:
The Treasury Department began to spend $220 billion in September 2008 to buy mortgage-backed securities before ending the program in December. A healthy market for these securities, which are giant pools of home loans, ensures that lenders have plenty of money to issue mortgages.
The Federal Reserve pledged to buy $1.25 trillion worth of mortgage-backed securities, the largest single intervention the central bank has undertaken amid the financial crisis and recession. The Fed has said it will end this program on March 31.
Fannie Mae and Freddie Mac, the two firms that own or guarantee half of the nation's $12 trillion mortgage market, were taken over by the government in September 2008. The move helped these firms borrow at low rates because lenders know they cannot fail. They passed on these savings to consumers in the form of low rates. On Christmas Eve, the Treasury said it would cover all of their losses, but said that holdings of mortgage-backed securities must be scaled back over time.
-- David Cho