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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Lizzie Tudor who wrote (176801)	1/13/2009 12:50:02 PM
From: Jim McMannis	Read Replies (4) \| Respond to of 306849

To the rescue! Comml Real Estate Sector Seeks $20 Billion Of TARP Funds nasdaq.com WASHINGTON -(Dow Jones)- Stakeholders in the commercial real estate market are pushing lawmakers to devote at least $20 billion of financial rescue funds to a new Federal Reserve facility aimed at unfreezing lending to the sector. Lobbyists for developers of shopping malls, office parks and high-rise buildings are warning lawmakers that the industry may not be able to roll over tens of billions of dollars of debt set to mature this year if the government doesn't act. A coalition of real estate industry and other business groups outlined their concerns in a letter Tuesday to key lawmakers. The letter was obtained by Dow Jones Newswires. "In 2009, tens of billions of commercial real estate mortgage loans will come due, but under current conditions, there will be insufficient capacity to refinance the performing commercial real estate loans that are maturing, which could result in loan defaults," the coalition wrote to House Financial Services Chairman Barney Frank, D-Mass., and Rep. Spencer Bachus, R-Ala., the panel's ranking minority member. The Treasury Department recently announced that it would devote $20 billion of Troubled Asset Relief Program, or TARP, funds to a new Federal Reserve facility to unlock credit for a range of consumer loans. Under the $200 billion program, the Fed has agreed to lend money directly to companies that post as collateral securities backed by car loans, student loans, credit-card debt as well as loans guaranteed by the Small Business Administration. The commercial real estate coalition praised language in legislation introduced last week by Frank that encourages the Fed and the Treasury to extend the facility to the commercial real estate market. But it is urging policy makers to go further by establishing a separate facility at the Federal Reserve Bank of New York for commercial real estate that is backstopped by TARP funds. The facility would help foster the refinancing of performing loans held by banks or in pools of commercial mortgage-backed securities, or CMBS, according to the letter to Frank and Bachus. It also would facilitate the sale of CMBS through traditional private-sector channels. The commercial real estate market hasn't experienced the wave of defaults that has battered the residential mortgage market. But investors have shunned commercial mortgage-backed securities all the same since the onset of the credit crisis in August 2007. Roughly half of the $6 trillion commercial real estate market is financed through debt, according to the coalition. "Many steps are needed to address this issue, but the first and most significant action would be for policy makers to request that the Treasury Department provide, at a minimum, $20 billion in TARP funds to revive the broader private commercial mortgage markets," the coalition wrote to Frank and Bachus. Coalition members include the Commercial Mortgage Securities Association, the International Council of Shopping Centers, the Mortgage Bankers Association, the National Association of Realtors and the U.S. Chamber of Commerce. A range of groups, from community bankers to home builders, are weighing in on how the remaining funds of the $700 billion TARP program should be deployed. The new administration will have fairly broad leeway to make changes in how it carries out the financial rescue, as it long as it gains access to the last tranche of funds. At the urging of President-elect Barack Obama, the Treasury on Monday submitted a request for the remaining $350 billion of TARP funds, as required by law. Congress can block the release of the funds, a distinct risk due to an outpouring of criticism from lawmakers about the program. -By Jessica Holzer, Dow Jones Newswires; 202-862-9228; jessica.holzer@ dowjones.com