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TALF Warms Up To CRE

The move to get commercial real estate included in the Federal Reserve’s Term Asset Backed Securities Loan Facility is picking up steam. An amendment to TALF has been set forward that gives the option, but not the obligation, for commercial real estate debt to be accepted into the program. A vote on the amended bill in the House of Representatives is likely next week, at which time it will head to the Senate.

Under the program, the Federal Reserve Bank of New York will set up a credit facility sized up to $200 billion. It would be backed by $20 billion in credit protection from TARP funds. The facility would accept newly originated, high-quality secured and unsecured commercial real estate debt as collateral. Chip Rodgers, senior v.p. at the Real Estate Roundtable, stressed that the facility is not a direct loan or a bailout, but rather a credit facility that supports new issuance.

If passed, TALF will likely become active in February, at which time the government will make a call on exercising its option to accept commercial real estate debt, Rodgers said. He added that he is cautiously optimistic about the outcome. "We think the conversation [between RER and Washington] has shifted from trying to make the case that there is a problem to, ‘What should we do about it?’" he said.

The RER began lobbying last month for the changes. "It’s an opportune time to move policy because of the change in Congress and the new administration coming in," Rodgers said. The program originally applied only to student loans, auto loans, credit card loans and other asset-backed securities.

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