Eligible Collateral under TALF Expanded to include Commercial Mortgage-Backed Securities

On May 1, the Federal Reserve Board announced the expansion of the TALF program to include commercial mortgage-backed securities (CMBS) and securities backed by insurance premium finance as eligible collateral, with the first subscription date scheduled for late June.  In addition to the Public-Private Investment Program, the expansion is designed to address potential defaults on commercial properties while supporting the issuance of new loans.  While the current TALF program limits all loans to 3-year maturity terms, the June offering will be the first to offer 5-year loans for CMBS, Asset-Backed Securities (ABS) backed by student loans, and ABS backed by loans guaranteed by the Small Business Administration.  The Federal Reserve Board has committed up to $100 million for 5-year loans, subject to change after evaluation.  As is the case with all collateral under TALF, the CMBS must be issued on or after January 1, 2009, with the underlying loans having origination dates on or after July 1, 2008.  More details on the terms and conditions of the program can be found here: http://www.newyorkfed.org/markets/talf_cmbs_terms.html

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