In a letter addressed to House Financial Services Committee Chairman Barney Frank and Ranking Chairman Spencer Bachus, the Commercial Mortgage Securities Association (CMSA) urged Congress to extend the Term Asset-Backed Securities Lending Facility to commercial real estate to facilitate lending in the private commercial mortgage market.
The CMSA, together with a group of 11 industry associations, has asked Congress for $20 billion in Troubled Asset Relief Program (TARP) funds – a figure representing 2.9% of the overall $700 billion in allocated TARP relief.
The 11 commercial real estate industry groups believe such a move would ease the lending crisis that has exacerbated the downturn in the U.S economy, which is now starting to negatively affect commercial real estate market conditions.
This coalition of groups recommended that the Federal Reserve Bank of New York utilize TARP funds to create a commercial lending facility that would provide the private market with liquidity and allow for the extension of new credit, as well as assist in refinancing performing loans held by banks or in commercial mortgage-backed securities (CMBS) pools, indicating that it would facilitate the sale of CMBS through traditional private-sector sources.
"Currently, banks and the CMBS market represent 75 percent of all outstanding commercial real estate loans," the joint letter stated. "The CMBS market has ceased to function with respect to new issuance, and existing bonds trade at highly excessive spreads, all of which heralds systemic dysfunction."
CMSA, together with the coalition of industry groups, also submitted a similar letter to the Senate, addressing identical concerns and requests to Senate Finance Committee Chairman Christopher Dodd.