Proposal for Commercial RE Legislation Gains Momentum

Rep. Walt Minnick's (D., Idaho) plan to introduce legislation that would authorize the U.S. Treasury to provide as much as $15 billion to $25 billion in guarantees on new loans to the commercial real estate sector is gaining momentum in both chambers of Congress.

Minnick said he was still finalizing the details of the measure but, based on preliminary discussions with Treasury staff, expects to have the administration's support.

Under the measure, Treasury would guarantee bonds backed by small-balance loans financing strip malls, office parks, and other commercial properties. In exchange, it would collect fees in the amount of 2 percent of each underlying loan in the bond. To qualify for the federal backing, the bond would have to carry an investment-grade rating and each underlying loan in the security would have to be for $10 million or less. The program would phase out after three years.