Legacy TALF Program Recevies Nearly $670 Million in Applications

The latest round of applications for financing under the government's Term Asset-Backed Securities Loan Facility (TALF) produced the first investor applications for loans to purchase legacy commercial mortgage-backed securities (CMBS). The loan applications totaled $668.94 million.
The Federal Reserve Bank of New York held the most recent facility on July 16, which marked the first opportunity for investors to request funding for existing CMBS. Sam Chandan, president and chief economist of Real Estate Econometrics, said the early results constituted a "positive indication of the potential for activity in future rounds." However, he noted that the first wave of applications would have little overall impact on the commercial real estate capital markets.
"The absolute amount of the current request—roughly 0.1 percent of outstanding CMBS balances—will not materially impact liquidity in the short term," Chandan said.
Jan Sternin, the Mortgage Bankers Association's senior vice president of commercial/multifamily, said the early returns were encouraging: "This is an important beginning and will be instrumental in the restoration of liquidity to the capital markets."
The Fed received no requests for newly issued CMBS, but Chandan said the lack of activity wasn't particularly surprising.
"The result is consistent with our expectations for the second round, given that only two months have passed since policy makers announced the exact timeline for the TALF's expansion to commercial securities. We anticipate a modest level of loan requests late this year, once the investment opportunities become more clear," he said.