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Dec
18

In particular, any borrower on a TALF loan must certify that they are not able to obtain “adequate credit housing” from other banking institutions. The simple language of this certification implies that a TALF borrower must make efforts to obtain loans from “banks” other than the TALF program. However, certification does not specify to what extent the effort is sufficient. Nor is it clear why financing by lenders that are not “banks” would not constitute “adequate credit housing.” In addition, the certification requirement could make available to TALF an ABS investor who, because of his own bad loans, cannot obtain any credit, while TALF is not available to a highly eligible investor in the same ABS obligation, who is otherwise able to insure loans. It is not clear that this result supports the objectives of the TALF program. Neither the FAQs nor the MLSA indicate when the borrower must transfer the margin to his talf agent. Under the MLSA, the margin amount for all new acquisition guarantees will be included in the confirmation communication that the administrator makes available to the TALF agent two business days prior to the planned loan, and the TALF agent is required to deliver the margin by 8:30 a.m. .m by the loan deadline. Section 3.7 of the MLSA sets out the terms of the EIB`s loans. Essential updates include: In general, the amount of the talf loan is the market value of the mortgaged security minus a reduction or a “haircut,” and the amount of the haircut depends on the asset class and the average life of the accounting ABS that serves as collateral for the loan. FaQs give this calculation of the loan amount as (i) the underlying minus (ii) the basic discount and specify how to determine these values. 16 ABS series are required to publish in the prospectus or offer document if the associated issue is “premium” or “subprime” according to talf criteria. If a prospectus or offer document does not contain this information, the associated issue is considered a “subprime” for TALF purposes.

Auto-credit ABS and auto-leasing ABS are considered “premium” if the weighted average fico-score of receivables is equal to or greater than 680. FICO-free receivables are assigned for this calculation to the FICO MINIMUM score of 300. Commercial receivables may be excluded from this calculation if historical cumulative net losses on these accounts are equal to or less than those relating to claims on individual debtors and this information is available in the prospectus. In addition, the share of commercial receivables in a trust must not exceed 15 per cent.