The Federal Reserve Board has expanded the Term Asset-Backed Securities Loan Facility (TALF) to include four additional categories of asset-backed securities (ABS): ABS backed by mortgage servicing advances, ABS backed by loans or leases relating to business equipment, ABS backed by leases of vehicle fleets and ABS backed by floorplan loans.
Accepting ABS backed by mortgage servicing advances should improve servicers' ability to work with homeowners to prevent avoidable foreclosures, the Fed says.
Eligible servicing advance receivables will include receivables created by principal and interest, tax and insurance, and corporate advances made by Fannie Mae- or Freddie Mac-approved residential mortgage servicers under pooling and servicing agreements. Mortgage servicer advances must have been originated on or after Jan. 1, 2007. Eligible advance receivable ABS must have an expected life of no more than five years.
The new categories of collateral will be eligible for the April TALF funding. Additional details on the April funding will be released March 24. Subscriptions for the April funding will be accepted April 7, and those loans will settle April 14. A number of other asset classes are under review, the Fed adds.
SOURCE: Federal Reserve