Letter Sent for Support for S. 1835, the United States Covered Bond Act of 2011

On March 14, 2012, NAR signed onto two coalition letters (second letter will follow in next blog), urging Senate Majority Leader Reid and Republican Leader McConnell to expand the Senate jobs legislation to include provisions aimed to enhance the flow of credit to the small business and commercial real estate sectors.

In the letter below, NAR requested the Senate leaders to include S. 1835, the “U.S. Covered Bond Act,” sponsored by Sens. Hagan (D-NC) and Corker (R-TN), in the Senate jobs bill. The inclusion of this legislation could provide an additional new source of capital to commercial property owners by creating a statutory framework for a U.S. covered bond market. Already successfully used in Europe and Canada, covered bonds allow banks to raise funds by issuing pools of high quality assets as eligible collateral to investors, enabling these financial institutions to extend vital credit to businesses.

The Honorable Harry Reid The Honorable Mitch McConnell

Majority Leader Republican Leader

United States Senate United States Senate

Washington, DC 20510 Washington, DC 20510

RE: Support for S. 1835, the United States Covered Bond Act of 2011

Dear Leaders Reid and McConnell:

We are writing to respectfully request your inclusion of S. 1835, the U.S. Covered Bond Act, sponsored by Senator Kay Hagan, Senator Bob Corker, Senator Chuck Schumer and Senator Mike Crapo into the legislation currently being drafted to encourage the additional availability of capital for our nation’s small businesses.

While much of the focus of this legislative effort has been centered on promoting additional equity capital formation, we also believe the increased availability of cost-effective debt capital is critical for small businesses to be able to grow and create new jobs. Under S. 1835, small business loans are an asset class (along with residential mortgages, commercial real estate, auto loans and student loans) that is eligible to be used as collateral for a covered bond under the statutory framework. This will allow for additional liquidity and investment to be directed to help small businesses.

This legislation is both bipartisan and bicameral, with near identical versions having been introduced in the House and Senate. Over the last three years, there have been three specific hearings on the legislation held by the Senate Banking Committee and House Financial Services Committee. The House Financial Services Committee recently passed the legislation by a broad bipartisan vote of 44-7-3.

We agree that promoting job creation is a top priority and that helping provide small businesses with additional equity and debt capital is vital to that effort. We thank you for your hard work for the American people and look forward to working with you on this important legislation.

Sincerely,

American Land Title Association American Resort Development Association

American Securitization Forum Certified Commercial Investment Member

CRE Finance Council Financial Services Roundtable

Housing Policy Council Institute of Real Estate Management

Mortgage Bankers Association National Apartment Association

National Association of Realtors National Multi Housing Council

Real Estate Roundtable Realtors Land Institute

Society of Industrial & Office Realtors TIAA-CREF

Securities Industry and Financial Markets Association