While most Federal Reserve officials agree with the decision to use proceeds from maturing mortgage-backed to buy long-term Treasuries, reinvesting in mortgage-backed securities “might become desirable if conditions were to change.” According to the minutes of its meeting from earlier this month, the Federal Open Markets Committee directed its trading desk at the New York Fed to maintain the total face value of domestic securities held in the system open market account at about $2 trillion. This is achieved through reinvesting principal payments from agency debt and agency mortgage-backed securities in longer-term Treasury securities. Most of the FOMC stands in agreement with the reinvestment policy with Kansas City Fed chief Thomas Hoenig the only dissenter. He doesn’t feel the reinvestments help support the committee’s policy objectives of maximum employment and price stability. FOMC members said commercial real estate markets remained under pressure and “investor demand for high-quality commercial mortgage-backed securities reportedly was robust, although issuance of CMBS remained muted” during the second quarter. Members said some indications show credit conditions for households and smaller businesses are beginning to improve but are expected to be modest in the near term with an acceleration of growth next year. And the committee members believe “the housing sector likely had bottomed out,” although large inventories of vacant and unsold homes, along with continuing foreclosures, will increase the number of houses for sale and likely “continue to damp residential construction, indicating that a sustained upturn from very low levels was not imminent.” Write to Jason Philyaw.