MBS RECAP: 12/2/2011

(Reuters) - The Federal Reserve Bank of New York said on Friday it would begin publishing on its website the regular survey it distributes to a selection of bond dealers before every Federal Open Market Committee meeting.

The New York Fed uses its primary dealer surveys, sent to the 21 banks and securities firms authorized to deal directly with the Treasury and the Federal Reserve to help implement monetary policy, to garner feedback from market participants that the FOMC can use in its policy deliberations.

The latest survey contains 14 questions about dealers' expectations for Fed policy in the future and their responses to the Fed's recent moves and communication methods. (Reporting by Emily Flitter; Editing by Chizu Nomiyama)

(Reuters) - GMAC Mortgage, the mortgage origination and servicing operation of Ally Financial Inc, said it will stop purchasing new mortgage loans in Massachusetts that are originated by correspondent lenders and wholesale brokers.

The move comes a day after the Massachusetts attorney general filed a lawsuit against five large U.S. banks -- Bank of America, JPMorgan Chase & Co, Citigroup, Wells Fargo & Co and GMAC -- accusing them of deceptive foreclosure practices, such as using robo-signers and false documents.

"GMAC Mortgage has taken this action because recent developments have led mortgage lending in Massachusetts to no longer be viable," the company said in a statement.

GMAC said it will honor all commitments made with such lenders as of Dec. 5, 2011 and will continue to service its existing customers and honor its contractual obligations as a servicer.

The Fed buyback at 11am got things kicked off in a friendly direction, but tepidly so. Then the rumor mill started churning and a few more bond-friendly tidbits popped out. First and foremost (and not really a rumor any more) is increasing attention paid to an earlier article from "The Hill" saying that conservative lawmakers will try to prevent the US from increasing it's participation in the IMF in order to facilitate a Euro-Zone bailout. The article is from this morning, but for some reason has come to the forefront only recently?

There were also unverified rumors of a potential downgrade of Spain, but we haven't heard anything else since closer to 11am.

Stocks are near their lows of the session and 10yr yields are down into the 2.07's, and may be showing some reluctance to the idea of going any lower. Volume spiked at 2.065 as yields bounced higher. MBS similarly bounced lower at 102-02, but the overall shift from the tentative stance following NFP has been enough to shift reprice risk to the positive side. A few of the early lenders have already repriced as this was being written. More may follow if current levels are held or improved upon.