Real Estate Left Out of TALF For Now

The Federal Reserve on Friday released details on how it will jump-start the asset-backed securities market but for now is excluding real estate-backed receivables from the program. Initially, the central bank will provide financing on consumer debt including auto, credit card and student loans but not commercial or private label mortgages. At press time a spokesman from the Fed had not returned a telephone call about the matter. The private label residential mortgage market ground to a near halt almost a year ago. When the $200 billion ABS program was announced late last year commercial real estate loans and private label mortgages were supposed to be included in the effort, at least according to comments made by then Treasury secretary Henry Paulson. According to the outline released Friday, the Fed will provide non-recourse financing to ABS issuers on only AAA rated collateral. If the borrower/issuer does not repay the loan to the Fed the agency will sell the note to a special purpose vehicle whose job it will be to collect on the debt.