New York Fed Revises TALF Master Loan and Security Agreement
March 3, 2009
The following highlights some of the key changes made to the MLSA from the
February 18 posting:
The revised MLSA now provides for the alternative settlement mechanic
where the underwriter of New Acquisition Collateral is the same as the
borrower's Applicable Primary Dealer. In this case, the Haircut Amount need
not be paid to the Custodian.
The revised MLSA now permits the Market Value of Items of Collateral to
exceed 100% of par (but not greater than 110% of par); provided, that TALF
Loans may not be made against any such “Above Par Collateral” unless the
TALF Standing Loan Facility Procedures provide for a “Required Monthly
Amortization Amount” with respect to any such Above Par Collateral. The
Required Monthly Amortization Amount will be designed to amortize the
premium on such Above Par Collateral.
The revised MLSA now provides that floating rate TALF Loans that are
secured by SBA 7(a) collateral will bear interest at a spread to the Fed Funds
target rate, rather than LIBOR.
For all Floating Rate Loans, the date on which the reference rate for the first
Loan Accrual Period will be calculated has been changed from two Business
Days before the beginning of the Loan Accrual Period to the Loan
The revised MLSA clarifies that the SPV created to hold Collateral received
by FRBNY (as well as any other transferees of Collateral) will be entitled to
the same recourse rights as FRBNY. This provision does not change the
extent of recourse, if any.
The revised MLSA clarifies that Borrowers electing to exercise their right to walk away from their loans are expected to deliver a Collateral Surrender and Acceptance Notice on or before maturity.