Federal Funds to Boost Commercial Real Estate

Daily Real Estate News | May 14, 2009 |
Federal Funds to Boost Commercial Real Estate

The federal government will take major steps to boost lending and prevent a meltdown in the commercial real estate market, representatives from the U.S. Treasury Department said Wednesday at the 2009 REALTORS® Midyear Legislative Meetings in Washington, D.C.

The number of new loans for commercial properties sank 70 percent in the first three months of 2009 from a year earlier, the Mortgage Bankers Association reported this week.

To loosen up tight lending, Treasury officials said they will include commercial mortgage-backed securities purchases in its Term Asset-Backed Securities Loan Facility (TALF) program. Previously, the department said total TALF assistance could amount to $1 trillion.

“Brokers, REALTORS®, and borrowers are finding it very hard to transact in this market,” Seth Wheeler, deputy assistant secretary for federal finance at Treasury, told the group. “What we’re trying to do is provide a pull channel for financing. It will take time, but we hope we’ll see a return of liquidity.”

However, some subcommittee members were skeptical about the program. A few of them argued that most of the stimulus funds that have been dispensed thus far have not made it to consumers or small businesses, two critical groups for the commercial real estate sector. They asked the Treasury representatives when these groups would receive greater assistance.

While the Treasury officials did not provide specific timelines, they assured the attendees that they would act soon.

“We understand how important the issue is,” Wheeler said. “We want to move as quickly as possible to form a policy response.”

—Brian Summerfield, REALTOR® Magazine