The Federal Reserve Board has expanded its new Term Asset-Backed Securities Loan Facility (TALF) to help cash strapped mortgage servicers that pay advances to MBS investors to cover missed payments by delinquent homeowners.

Starting in April, the Fed's TALF will start accepting servicing advances as collateral in asset-backed securities.

Details for the first TALF funding for mortgage servicing advances will be released March 24. "Accepting ABS backed by mortgage servicing advances should improve the servicers' ability to work with homeowners to prevent avoidable foreclosures," the Fed said.

Scott Talbott, senior vice president for the Financial Services Roundtable, welcomed the Fed's initiative. "This will help restore liquidity in all areas of the mortgage market," Talbott said.

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