U.S. lawmakers urge commercial property loan help

WASHINGTON, July 31 (Reuters) - U.S. lawmakers on Friday urged the Treasury Department and the Federal Reserve to extend the duration of a commercial real estate lending support program, saying the sector is poised for a dangerous credit shortfall in the recession-mired economy.

A group of 41 members of the House of Representatives from both political parties asked Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben Bernanke to extend the Term Asset-Backed Securities Loan Facility through 2010. TALF is due to expire Dec. 31.

"The program's remaining term does not permit adequate time to develop sufficient volume to address the massive credit shortfall in the sector," the lawmakers wrote. Rep. Paul Kanjorski initiated the letter, which was signed by powerful House Financial Services panel chairman Barney Frank.

The missive highlights rising concern in Congress about weakness in the commercial real estate industry. Lawmakers grilled Bernanke about the health of the sector at hearings last week.

The amount of troubled commercial real estate loans could double to $100 billion by year end as delinquencies rise and financing remains elusive, Fitch Ratings said on Thursday.

"We agree with you that this is one of the more difficult areas," Bernanke told a Senate panel.

The central bank head said at the time the Fed was monitoring the situation and would extend the duration of TALF past its planned expiration if markets continue to need support.

The lawmakers said more than $1 trillion in commercial real estate loans would mature in the next couple of years. Without help from the TALF, the commercial real estate market could lack liquidity to provide further lending, they said.

"A consistent, sizable financing market for real estate still does not exist," the members of Congress said.

The Fed launched the TALF program in November to spur lending in a range of hard-hit sectors. In it, the central bank lends against top-rated asset-backed securities held by investors.

The Fed opened TALF to commercial real estate lending in May.

Most commercial mortgage-backed real estate securities transactions take around four months to complete, said Patrick Sargent, president of the Commercial Mortgage Securities Association, in a statement. Given the long lead time, the TALF program will support more commercial real estate loans if it is extended, he said. (Reporting by Mark Felsenthal in Washington and Al Yoon in New York; Editing by James Dalgleish)