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Term Asset-Backed Securities Loan Facility
(CMBS): Terms and Conditions
Effective May 1, 2009

Securities Lending
Term Securities
Lending Facility
Commercial Paper
Funding Facility
Money Market Investor
Funding Facility
Term Asset-Backed
Securities Loan Facility
TALF Program Terms
and Conditions
TALF Announcements
TALF Documents and
TALF Guide for
and Conditions
Primary Dealer Credit
Maiden Lane
Primary Dealers


Qualifying Securities
Eligible collateral for a TALF loan will include U.S. dollar-denominated,
cash (that is, not synthetic) commercial mortgage-backed passthrough securities (each a “CMBS”) issued on or after January 1,
2009 as to which all of the following conditions are satisfied as of its
date of issuance (except as the context otherwise requires).
Assets: The assets underlying the CMBS must satisfy the
conditions described under “Qualifying Assets” below.
Pooling and Servicing Agreements: The pooling and
servicing agreement and other agreements governing the
issuance of the CMBS and the servicing of its assets must
satisfy the conditions described under “Pooling and Servicing
Agreements” below.
Current Ratings: As of the TALF loan closing date, the CMBS
must have a credit rating in the highest long-term investmentgrade rating category from the required number of TALF
CMBS-eligible rating agencies and must not have a credit
rating below the highest investment-grade rating category
from any TALF CMBS-eligible rating agency. Eligible collateral
will not include a CMBS that obtains such credit ratings based
on the benefit of a third-party guarantee or a CMBS that a
TALF CMBS-eligible rating agency has placed on review or
watch for downgrade. See the “Frequently Asked Questions for
CMBS” for further information regarding TALF CMBS-eligible
rating agencies and the ratings conditions that must be
satisfied for a CMBS to be eligible collateral.
Payment Terms: The CMBS must entitle its holders to
payments of principal and interest (that is, must not be an
interest-only or principal-only security). The CMBS must bear
interest at a pass-through rate that is fixed or based on the
weighted average of the underlying fixed mortgage rates. The
CMBS must not be junior to other securities with claims on the
same pool of loans.
Issuer: The issuer of the CMBS must not be an agency or
instrumentality of the United States or a
government-sponsored enterprise.
Settlement: Each CMBS must be cleared through the
Depository Trust Company.
Qualifying Assets

Asset Types: Each CMBS must evidence an interest in a trust
fund consisting of fully-funded, first-priority mortgage loans
that are current in payment at the time of securitization, and
not other CMBS, other securities or interest rate swap or cap
instruments or other hedging instruments. A participation or
other ownership interest in such a loan will be considered a
mortgage loan and not a CMBS or other security if, following a
loan default, the ownership interest is senior to or pari passu
with all other interests in the same loan in right of payment of
principal and interest. All mortgage loans must be fixed-rate
loans. No mortgage loan may provide for interest-only
payments during any part of its remaining term.
Property Types: The security for each mortgage loan must
include a mortgage or similar instrument on a fee or leasehold
interest in one or more income-generating commercial
properties. Each property must be located in the United States
or one of its territories.
Origination Dates: All mortgage loans must have been
originated on or after July 1, 2008.
In-Place Underwriting: All mortgage loans must have been
underwritten or re-underwritten recently prior to the issuance
of the CMBS, generally on the basis of
then-current in-place, stabilized and recurring net operating
income and then-current property appraisals.
Pooling and Servicing Agreements
The pooling and servicing agreement and other agreements
governing the issuance of the CMBS and the servicing of its assets
must contain provisions to the following effects.
If the class of the CMBS is one of two or more time-tranched
classes of the same distribution priority, distributions of
principal must be made on a pro rata basis to all such classes
once the credit support is reduced to zero as a result of both
actual realized losses and “appraisal reduction amounts”.
Control over the servicing of the assets, whether through
approval, consultation or servicer appointment rights, must
not be held by investors in a subordinate class of CMBS once
the principal balance of that class is reduced to less than 25%
of its initial principal balance as a result of both actual realized
losses and “appraisal reduction amounts”.
A post-securitization property appraisal may not be recognized
for any purpose under such agreements if the appraisal was
obtained at the demand or request of any person other than
the servicer for the related mortgage loan or the trustee.
The mortgage loan seller must represent that, upon the
origination of each mortgage loan, the improvements at each
related property were in material compliance with applicable
Loan Terms, Haircuts and Other Conditions
The general terms and conditions of the TALF program apply to TALF
loans that are secured by a CMBS described above, except as
modified by the following terms and conditions:
The New York Fed expects collateral pools to be diversified
with respect to loan size, geography, property type, borrower
sponsorship and other characteristics, but will consider CMBS
backed by nondiversified collateral on a case-by-case basis.
The New York Fed will engage a collateral monitor and will
reserve the right, until the issuance of the CMBS, to exclude
specific loans from each pool. In addition, the New York Fed
will retain the right to reject any CMBS as TALF loan collateral
based on its risk assessment.
The New York Fed expects the agreements governing the
issuance of each CMBS and the servicing of its assets, and the
terms and conditions of its underlying loans, to permit, and to

provide in effect for, reporting that is sufficient to enable the
New York Fed to monitor and evaluate its position as secured
Each TALF loan secured by a CMBS will have a three-year
maturity or five-year maturity, at the election of the
borrower. A three-year TALF loan will bear interest at a fixed
rate per annum equal to 100 basis points over the 3-year
Libor swap rate. A five-year TALF loan is expected to bear
interest at a fixed rate per annum equal to 100 basis points
over the 5-year Libor swap rate.
The collateral haircut for each CMBS with an average life of
five years or less will be 15%. For CMBS with average lives
beyond five years, collateral haircuts will increase by one
percentage point for each additional year of average life
beyond five years. No CMBS may have an average life beyond
ten years.
The average life of a CMBS will be the remainder of the
original weighted average life determined by its issuer
employing industry-standard assumptions.
Any remittance of principal on the CMBS must be used
immediately to reduce the principal amount of the TALF loan
in proportion to the TALF advance rate. For example, if the
TALF advance rate was 85 percent, 85 percent of any
remittance of principal on the CMBS must immediately be
repaid to the New York Fed. In addition, for a five-year TALF
loan, the excess, in any TALF loan year, of CMBS interest
distributions over TALF loan interest payable will be remitted
to the TALF borrower only until such excess equals 25% (10%
in the fourth loan year and 5% in the fifth loan year) of the
haircut amount, and the remainder of such excess will be
applied to TALF loan principal.
A TALF borrower must agree not to exercise or refrain from
exercising any voting, consent or waiver rights under a CMBS
without the consent of the New York Fed.


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