On May 19, 2009, the Federal Reserve Board announced that, starting in July, certain high quality commercial mortgage-backed securities issued before January 1, 2009 ("Legacy CMBS") will become eligible collateral under the Term Asset-Backed Securities Loan Facility ("TALF"). This means that eligible CMBS may be purchased or sold through the TALF program, and marks the first addition of a legacy asset class to the list of eligible TALF collateral.
According to the Federal Reserve, the objective of this expansion is to create liquidity and help determine accurate prices for Legacy CMBS securities and, by doing so, stimulate the expansion of new credit and ease balance sheet pressures on banks and other institutions holding Legacy CMBS securities.
To be eligible as collateral for TALF loans, the Legacy CMBS must meet the following criteria:
The general terms and conditions of the TALF program apply to TALF loans that are secured by Legacy CMBS, with the following modifications:
The FRBNY may limit the volume of TALF loans secured by Legacy CMBS and is considering whether to allocate this volume via auction or other procedure. The FRBNY is also in the process of establishing other requirements that will apply to Legacy CMBS.
For a complete term sheet for the expansion of the TALF to Legacy CMBS, please visit http://newyorkfed.org/markets/talf_cmbs_terms.html.
This Client Alert is prepared for the general information of our clients and other interested persons. This Client Alert is not, and is not intended to be, comprehensive in nature. Due to the general nature of its content, this Client Alert is not and should not be regarded as legal advice.
Klehr Harrison has represented borrowers in several TALF transactions and, as part of that representation, has worked through issues with several of the principal banks that act as “dealers” on behalf of the New York Federal Reserve. If you are interested in determining how you could participate in TALF, or if you have any questions about the TALF program, please contact any of the persons listed below:
Keith W. Kaplan, Esq. Jon M. Katona, Esq.
Jon S. Robins, Esq. Denise M. Day, Esq.
Bradley A. Krouse, Esq. Richard S. Roisman, Esq.
Stephan L. Cutler, Esq.
CIRCULAR 230 NOTICE. Any advice expressed above as to tax matters was neither written nor intended by the sender or Klehr, Harrison, Harvey, Branzburg & Ellers LLP to be used and cannot be used by any taxpayer for the purpose of avoiding tax penalties that may be imposed on the taxpayer. The recipient may not and should not rely upon any advice expressed above for any purpose and should seek advice based on the recipient’s particular circumstances from an independent tax advisor.