Fed considers 5-year CMBS loans through TALF

by LJ Miehe on April 17, 2009

The Federal Reserve is considering offering longer loans to investors in commercial mortgage-backed securities as part of a plan to help jump-start the market for commercial real estate debt, The Wall Street Journal reported on Thursday.

The Fed since Febuary has been analyzing appropriate terms and conditions for accepting commercial mortgage-backed securities (CMBS) and other mortgage assets as collateral for its Term Asset-Backed Securities Lending Facility (TALF).

The Journal quoted unnamed people familiar with talks between the Fed and the commercial real estate industry as saying that the Fed is considering a five-year term for loans on CMBS rather than the normal three year-term for TALF credit, but has not reached a conclusion.

A Fed spokesperson could not immediately be reached for comment on the report.

The longer-term financing is important to investors in commercial real estate debt, because the underlying mortgages are for usually for longer terms and investors would be less willing to hold these securities without longer-term financing.

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