Some experts now say Federal Reserve purchases of agency MBS will fall to zero by September.

The Mortgage Bankers Association has asked the SEC to review the margin requirements in Rule 4210, arguing that lenders use to-be-announced securities to hedge their interest rate exposure rather than for speculation purposes.

It could be years before the Fed sells any of its holdings of agency MBS, according to John Williams, president and CEO of the Federal Reserve Bank of New York.

Issuing a non-agency MBS isn’t cheap; trade groups push for data, timeline if GSEs change credit scoring models; Ginnie reiterates its buyout policy.

The Federal Open Market Committee will begin letting agency MBS run off on June 1, but has no plans to actually sell securities.

The market decline, in response to the end of QE, has been severe, but much more orderly than in 2013.

The Fed revealed this week that any sales from its agency MBS portfolio will be telegraphed well in advance. Still, rates continue to rise.

The reputation of being a safe, liquid asset adds about 47 basis points to the “convenience premium” of agency MBS over investment grade bonds, according to the National Bureau of Economic Research.

Failure to submit a timely and specific repurchase demand involving pre-2008 non-agency MBS doomed a U.S. Bank lawsuit.

Rising interest rates will likely bolster investor interest in floating-rate mortgage securities such as agency CMOs and non-agency products. The Fed expects to begin unwinding its massive agency MBS portfolio “at a coming meeting.” (Includes three data charts.)