Term Asset-Backed Securities Loan Facility Extended

The Federal Reserve Board and Treasury Department jointly announced an extension to the Term Asset-Back Securities Loan Facility (commonly referred to as TALF), noting that they "do not anticipate any further additions to the types of collateral that are eligible for the facility," according to today's press release. TALF loans had previously been authorized through December 31, 2009, but today's move extends TALF loans against newly issued asset back securities and legacy commercial back securities through March 31, 2010. TALF loans against newly issued commercial mortgage back securities are now extended through June 30, 2010.
 
Click here for today's Federal Reserve Board and Treasury Department press release.

Hunton & Williams LLP Achieves TALF First

Hunton & Williams LLP represented American Home Mortgage Servicing, Inc. (“AHMSI”) and an affiliated issuer, AH Mortgage Advance Trust 2009-ADV1, in a $550 million sale of term notes (the “Notes”), in the first issuance of TALF-eligible notes secured by a revolving pool of servicer advance receivables. These Notes are term (i.e., non-revolving) asset-backed notes and are eligible collateral for loans to investors under the Term Asset-Backed Securities Loan Facility (“TALF”) program administered by the Federal Reserve Bank of New York (“FRBNY”). The servicer advance receivables consist of AHMSI’s contractual rights to reimburse-ment for advances AHMSI makes in its capacity as servicer under servicing agreements for securitized residential mortgage loans.

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Public-Private Investment Program Oversight Legislation Enacted

On May 19, 2009, the House of Representatives approved S.896 (the “Helping Families Save Their Homes Act of 2009”) by a margin of 367–54 and, on May 20, 2009, President Obama signed the bill into law. The bill includes legislation known as the “Public-Private Investment Program Improvement and Oversight Act of 2009” (the “Act”), which will impose significant duties on fund managers under the Public-Private Investment Program (“PPIP”) announced by the U.S. Department of the Treasury (“Treasury”). These provisions may limit managers’ interest in participating in the PPIP. A copy of S.896 is available here.

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Certain Legacy CMBS to Become TALF Eligible Collateral

Starting in July 2009, certain high-quality commercial mortgage-backed securities issued before January 1, 2009 (known as "legacy CMBS") will become eligible collateral under the Term Asset-Backed Securities Loan Facility (TALF), according to a Federal Reserve Board announcement today.   The Federal Reserve previously announced, on May 1, 2009, it would expand the range of acceptable TALF collateral to include newly issued CMBS starting with the June 16, 2009 subscription date.  The Federal Reserve also released a new term sheet and a frequently-asked-questions document, specific to legacy CMBS, today.

Additionally, the New York Federal Reserve announced a new TALF operation date for loans secured by asset-backed securities (ABS).  Subscriptions will be accepted on June 2, 2009, with a June 9, 2009 closing date.  The three year maturity date is June 11, 2012 and the five year maturity date is June 9, 2014.  

Click here for the new legacy CMBS terms and conditions, and click here for the frequently asked questions.

Click here for the press release on the new TALF operation date.

TALF Collateral Expands

Beginning this June both commercial mortgage-backed securities (CMBS) and securities backed by insurance premium finance loans will become eligible collateral under the Term Asset-Backed Securities Loan Facility (TALF), according to the Federal Reserve Board.  Additionally, the Federal Reserve Board announced that TALF loans with maturities of five years will be available this June.  All TALF loans currently have maturities of three years.  Click here for the Federal Reserve Board's press release.  Click here for terms and conditions for TALF CMBS, and click here for frequently asked questions regarding TALF CMBS. 

New TALF Interest Rates and May 5 Operation Date Announced

Two new interest rates for loans under the Term Asset-Back Securities Loan Facility (TALF) were unveiled today by the Federal Reserve Board.  The rates will apply to certain loans secured by asset-backed securities (ABS) and will take effect under the upcoming May 5, 2009 TALF operation date.  Subscriptions will be accepted on May 5, 2009, with a May 12, 2009 settlement date, and a May 14, 2012 maturity date.  The term is three years.
 
Click here for the Federal Reserve Board's press release, and click here for the Federal Reserve Bank of New York's press release. 

Click here for the revised TALF Form, and click here to compare it with the prior version.  

Click here for the revised Term Sheet, and click here to compare it with the prior version. 

Lastly, click here for the revised Frequently Asked Questions (FAQs), and click here to compare it with the prior version.

Navigating the Public-Private Partnership Investment Program

On March 23, 2009 the U.S. Department of Treasury (“Treasury”), in conjunction with the Federal Deposit Insurance Company (the “FDIC”) and the Federal Reserve (the “Fed”), announced the latest piece of its Financial Stability Plan: the Public-Private Partnership Investment Program for Legacy Assets (the “Program”). The Program consists of two separate plans, addressing two distinct asset groups: the Legacy Loan Program and the Legacy Securities Program. Treasury explained that the exact requirements and structure of the Loan Program will be subject to notice and comment rulemaking, but announced no timetable. On the other hand, the Securities Program requires any interested asset manager to submit by April 10th, an extensive application to serve as a Fund Manager under the Securities Program. Treasury is expected to select five Fund Managers by May 1st. In addition, Treasury expanded the Term Asset-Backed Securities Loan Facility (“TALF”) program to include Legacy Securities.

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Servicing Advance Receivables Now Eligible Collateral Under TALF

On March 19, 2009, the Federal Reserve Bank of New York expanded the list of collateral eligible for pledge under its TALF program to include, among other things, servicing advance receivables. A funding under the TALF program is structured as a loan from the Federal Reserve Bank of New York to an eligible borrower — which includes any U.S. company that owns eligible collateral and maintains an account relationship with a primary dealer.

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Are You Ready to Participate in the TALF?

It’s official. The Federal Reserve Board announced Monday, March 3, 2009, that the initial Term Asset-Backed Securities Loan Facility (TALF) subscription date is March 17, 2009, with a corresponding loan settlement date of March 25, 2009. In conjunction with this announcement, the Federal Reserve Board also published revised terms and conditions for participation in the TALF. Together, the revised terms and the short time frame promise a very busy week and a half for investors intending to participate in the TALF this month. Set forth below is a general overview of the TALF as it stands today. Please feel free to contact us for more specific information.

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Treasury Department Announces Financial Stability Plan Details

The Treasury Department announced details today of the new Financial Stability Plan.  Among the components of the revamped plan: 
 
1) A "stress test" for both banks wishing to participate in the Capital Assistance Program and banks with assets in excess of $100 billion.
 
2) A "Public-Private Investment Fund" of between $500 billion to $1 trillion which could utilize government financing and capital along side private capital, designed to encourage acquisition of troubled and illiquid assets.
 
3) A "Consumer and Business Lending Initiative" as a joint Federal Reserve and Treasury Department effort to expand the Term Asset-Back Securities Loan Facility (TALF) to as much as $1 trillion.  The expanded TALF would broaden the eligible collateral to include certain commercial mortgage-backed securities, private-label residential mortgage-backed securities, and other asset-backed securities.
 
4) Additional conditions for financial institutions receiving government capital assistance including, but not limited to, a) requiring those institutions to show how government assistance will help preserve or generate new lending, b) requiring participation in mortgage foreclosure mitigation programs, c) accepting restrictions on executive compensation and d) accepting restrictions on dividends, stock repurchases and acquisitions.
 
5) A soon-to-be announced housing support and foreclosure prevention plan.
 
6) A soon-to-be announced "Small Business and Community Banking Lending Initiative" which will encourage more small business lending.
 
Click here  for the Treasury Department's press release, and click here for the Financial Stability Plan's fact sheet.  Also, click here for the Federal Reserve's press release on the expansion of TALF.

Will TALF's New Terms and Conditions Stimulate Securitizations?

This past Friday, February 6, 2009, the Federal Reserve Board released the terms and conditions of the Term Asset-Backed Securities Loan Facility (TALF), which was first announced on November 25, 2008. Through the TALF, the Fed intends to increase credit availability for consumers and small businesses, generate liquidity for banks, stimulate an otherwise anemic asset-backed securities (ABS) market and reduce interest rate spreads on AAA-rated tranches to more normal levels. Another benefit of the TALF is that it will assist entities that have received TARP funds to meet political and regulatory pressures to demonstrate new lending even if they are struggling with liquidity concerns.

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