New York Fed Posts TALF Term Sheet

The Federal Reserve Bank of New York last week posted a term sheet indicating servicing advances are eligible collateral for borrowing from the Term Asset-Backed Securities Loan facility, also known as TALF.

The Mortgage Bankers Association and other industry trade groups had advocated for such a facility in the wake of the coronavirus pandemic.

Previously, asset-backed securities backed by eligible servicing advances were eligible collateral for the 2008 version of TALF. Under the term sheet (https://www.federalreserve.gov/newsevents/pressreleases/files/monetary20200323b3.pdf), the New York Fed indicates “the detailed terms and conditions will further define the eligible underlying credit exposures for purposes of the TALF. The definitions are expected to be broadly consistent with the defined terms used for purposes of the TALF established in 2008.” 

The term sheet notes eligible borrowers include “all U.S. companies that own eligible collateral and maintain an account relationship with a primary dealer.”

MBA has advocated strongly for creation of liquidity facilities to provide financing so servicers could help distressed borrowers with forbearance through the crisis. It said creation of this facility is “one potential means for providing that financing.”

Meanwhile, on Capitol Hill, debate continues on a $2 trillion COVID-19 stimulus bill.  MBA is advocating for the bill to provide for a liquidity facility for mortgage servicers making payments to investors on behalf of borrowers receiving forbearance.

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