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NEW YORK CITY-As if confirming speculation that the legacy CMBS program would start to gain traction as it went along, the Federal Reserve Bank of New York said Friday that it had gotten about $2.3 billion of requests for TALF loans to buy the securities in its August subscription round. The amount was more than triple the $669 million in loans that the New York Fed issued in July. However, for the third consecutive month since the program’s launch, no loans to buy newly issued CMBS were requested.

Investors were able to request loans of either three years or five years at rates of 3.0275% for three years or 3.8735% for five. Closing date on the loans is scheduled for August 28. The next round is scheduled for Sept. 17.

In a note to clients, Dr. Sam Chandan, founder of Real Estate Econometrics, wrote that the increase in requests for legacy support represents “a positive indication of the broader program’s ultimate potential. However, the absence of any requests for new CMBS three months after the finalization of the program’s expansion is disappointing. Aside from the expected lag from program announcement to deal structuring, we believe the delay also reflects investor concerns with structural issues in the CMBS market.”

On Thursday, the New York Fed announced that it had sold $1.6 billion in Fannie Mae MBS and had purchased a total of $25 billion in 15-year and 30-year agency MBS between August 13 and 19. Most of the agency securities in the past week’s transactions will mature in 30 years, with coupons ranging from 4.5 to 5.5. These included $140 million in 15-year and $18.9 billion in 30-year Fannie Mae MBS, $1.7 billion in 30-year Ginnie Mae securities and $5.9 billion in 30-year Freddie Mac.

The week began with the news that the Federal Reserve was extending the TALF program into 2010; it had been set to expire at the end of this year. TALF loans against newly issued ABS and legacy CMBS are being extended through next March 31, while lending against newly issued CMBS will run through June 30, 2010. In his note to clients, Chandan commented, “In spite of Monday’s announcement of the program’s extension into 2010, we believe that TALF-supported CMBS will have a limited impact on liquidity and the availability of credit.”

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