UPDATE 1-U.S. Fed makes changes to ABS lending facility

(adds details)

WASHINGTON, Dec 19 (Reuters) - The Federal Reserve Board on Friday altered terms of its loan facility for asset-backed securities, saying it would no longer distribute the loans through auctions.

The Fed said its $200 billion Term Asset-Backed Securities Loan Facility would provide loans to all borrowers with eligible collateral and the loan length would be extended to three years from one year.

The Fed said the changes were made after consultation with ABS issuers, investors and dealers. The revisions also include further specification of ABS collateral eligible for the program, which is administered by the Federal Reserve Bank of New York.

The New York Fed will offer loans under the TALF on a monthly basis. On a fixed day each month, borrowers will be able to request one or more loans by indicating for each loan the eligible collateral, the desired amount, the desired interest rate format -- fixed or floating.

The New York Fed will disburse loans to the borrower upon receipt of collateral, and the minimum size for each loan will be $10 million.

The U.S. Treasury Deparment will continue to provide $20 billion of credit protection to the Federal Reserve in connection with the loan facility, the Fed said.

Eligible collateral will be U.S. dollar demonimated cash or top-rated asset-backed securities or small business ABS backed by the U.S. government.

The eligible ABS must be issued on or after Jan. 1, 2009 and all or substantially all of he underlying credit exposures for eligible auto loan ABS must have been orignated on or after Oct. 1, 2007. Eligible credit card ABS must be issued to refinance existing credit card ABS issued in 2009, the Fed said. (Reporting by David Lawder, Editing by Chizu Nomiyama)