Last week, the National Association of REALTORS submitted a letter before the House Financial Services Committee hearing on "Unwinding Emergency Federal Reserve Liquidity Programs and Implications for Economic Recovery." Specifically, NAR asked policymakers to extend the Term Asset-Backed Securities Loan Facility (TALF) for legacy and new newly issued commercial mortgage-backed securities (CMBS) through the end of 2010.
Last November, the first CMBS in over eighteen months was sold with the assistance from TALF. Additional loans are now in the program's pipeline. However, due to the long-term nature and complexity of putting together CMBS deals-often taking between six months and two years to complete - potential investors will be excluded from participation as a result of the March 31, 2010 and June 30, 2010, sunset dates for legacy and newly issued CMBS, respectively. Given additional time, TALF will continue to help thaw the nearly frozen private commercial mortgage markets.
TALF was created last year in an effort to thaw the frozen $900 billion CMBS market, which has been a significant source of funding for the commercial real estate industry in the past decade. Under the program, the Federal Reserve provides investors with low-cost loans to buy securities backed by commercial real estate debt. It is estimated that roughly a dozen more CMBS deals are in the works, with most investors hoping to tap into TALF.
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