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A Cautious Thumbs-Up for TALF

NEW YORK CITY-Despite lukewarm response, CMBS experts say the Treasury's expansion of the program to legacy loans could succeed if the pieces fall into place.

By Cody Lyon | Updated on July 13, 2009

NEW YORK CITY-Despite initial tepidity, experts and Commercial Real Estate Players still express guarded optimism that the Treasury Department’s February expansion of the $1-trillion TALF program into the CMBS market might meet with success. This past June, TALF was further expanded to include CMBS legacy securities, i.e. those issued before Jan. 1, 2009. The next round of issuance will be July 16.

Notwithstanding their initial enthusiasm, commercial real estate investors have thus far been slow to express interest. In its initial round on June 16, there were no loan requests.

Real Estate Econometrics says anticipation for loan requests in the July 16 round is equally low. The company says policy makers and private market participants should consider a range of explanations for the initial round’s not attracting investors. REEcon asserts that among possible explanations for the initial weak response include a failure by policy makers to anticipate the time it would take to restart the dormant CMBS market processes, and the time it takes to execute the steps in the securitization process, from loan origination through to issuance.

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