TALF ALERT: Federal Reserve Bank of New York Releases Revised TALF FAQs

    16 June 2009

    On June 16, the Federal Reserve Bank of New York (“FRBNY”) released revised versions of the Frequently Asked Questions (“FAQ”) for the Term Asset-Backed Securities Lending Facility (“TALF”) related to issuances of 2009 commercial mortgage-backed securities (“CMBS”) and pre-2009 CMBS issuances (“Legacy CMBS”).

    The June operations for the TALF saw over $11 billion in asset-backed securities pledged for three or five-year non-recourse loans. The first operation for CMBS will take place later this week, and the first operation for Legacy CMBS will be in late July. We will continue to monitor developments related to the TALF.

    In the revised FAQs, it disclosed that the FRBNY has selected Trepp, LLC (“Trepp”) to be a collateral monitor as it relates to newly issued CMBS and Legacy CMBS. In its role as collateral monitor, Trepp will assist the FRBNY by providing valuation, modeling, analytics and reporting, as well as advising on these matters. According to the release, Trepp will not establish policies or make decisions for the FRBNY, including decisions whether to reject a CMBS as collateral for a TALF loan or exclude loans from mortgage pools. The FRBNY also indicated that it may use the services of one or more collateral monitors in connection with TALF.

    As previously announced, with respect to newly issued CMBS, the FRBNY may reject a CMBS pool, or a specific loan in a CMBS pool based on factors including, but not limited to, the CMBS or the individual loans not meeting the requirements stated in the Terms and Conditions, unacceptable concentrations in the pool of loans (borrower sponsorship, property type, geographic region), or if one or more of the loans in the pool is defaulted, delinquent in payment, or in special servicing.

    Similarly, with respect to Legacy CMBS, the FRBNY may reject a Legacy CMBS based on factors including, but not limited to, the Legacy CMBS not meeting the requirements stated in the Terms and Conditions, unacceptable performance of the underlying mortgage loan pool (high losses, delinquent loans, loans in special servicing or loans on servicer watch list), or unacceptable concentrations (borrower sponsorship, property type, geographic region).