The Federal Reserve Bank of New York (New York Federal Reserve) announced that The Term Asset-Backed Securities Loan Facility (TALF) will be expanded for the April funding date1 to include financing for purchases of eligible AAA-rated asset-backed securities backed by (i) mortgage servicing advances; (ii) loans or leases relating to business equipment; (iii) leases of vehicle fleets; and (iv) floorplan loans. This expands the current eligible collateral of AAA-rated asset-backed securities backed by auto, credit card, student, and SBA-guaranteed loans to include these four additional categories for future funding under the TALF program.
Mortgage servicing advances are loans made by residential mortgage servicers to cover payments missed by homeowners. The expansion of the TALF program to include mortgage servicing advances is intended to assist residential mortgage servicers’ ability to modify residential mortgages in order to reduce the level of residential foreclosures.
The New York Federal Reserve is expected to release additional details as to the April funding on March 24, 2009.
According to the New York Federal Reserve, the initial subscription for the TALF program that accepted loan applications until 5p.m. EST on March 19 received applications requesting financing for an aggregate $4.7 billion to purchase asset-backed securities backed by $1.9 billion of auto loans and $2.8 billion of credit card loans. There were no loan applications requesting financing to purchase student and SBA-guaranteed loans at the initial subscription. These initial TALF loans are scheduled to fund on March 25. 1