This morning, the Federal Reserve Board of New York released revised Frequently Asked Questions (FAQs) and revised documents and forms, including changes to the Master Loan and Security Agreement, for its Term Asset-Backed Loan Facility (TALF). TALF, which was launched earlier this month, was created in response to a near complete halt last fall in the consumer asset-backed securities (ABS) market and, consequently, much consumer lending.

The revised FAQs included clarifications on several topics. For example, the Federal Reserve provided added comfort that, if a borrower posts eligible collateral, the borrower should have “every expectation of financing” under TALF. Prior iterations of the guidance had merely indicated that funding would be at the complete discretion of the Federal Reserve. The Federal Reserve also clarified the conditions under which certain haircut rates would apply in the context of prime versus subprime auto financing, and noted that unless specifically disclosed in the related prospectus as prime, all TALF-eligible auto ABS would be considered subprime.

The Federal Reserve also seemed to expand the scope of eligible collateral to include auto dealer floorplan ABS from newly originated (after January 1, 2009) lines of credit, separate and apart from dealer floorplan ABS used to refinance existing dealer floorplan ABS. However, the Federal Reserve was not entirely clear on this point – subsequent discussion of this asset class in the FAQs seemed to contradict this expansion, emphasizing in multiple places throughout the FAQs that eligible dealer floorplan ABS must refinance existing debt.