Various federal agencies including The Office of the Comptroller of the Currency (“OCC”), the Board of Governors of the Federal Reserve System (“FRB”), the Federal Deposit Insurance Corporation (“FDIC”), the U.S. Securities and Exchange Commission (“SEC”), are seeking comment on a notice of proposed rulemaking that would implement the credit risk retention requirements pursuant to Exchange Act Section 15G (“Credit Risk Retention”) as added by Dodd-Frank Section 941 (“Regulation of Credit Risk Retention”). The new rule proposal would replace the original proposal published on April 29, 2011. Highlights from the new rule proposal include:
- expand the permissible forms of risk retention from those originally proposed to accommodate additional securitization structures, and replace the Premium Capture Cash Reserve Account approach with a fair value measurement for the risk retention instruments.
- require securitizers to be the entity that retains the risk; loan originators would only retain risk in limited circumstances and at their option.
- set the requirements for the qualified residential mortgage (QRM) exemption to be co-extensive with the qualified mortgage safe harbor established by the Consumer Financial Protection Bureau (CFPB). Comments are sought on an alternative that would incorporate additional factors into QRM, such as borrower credit history and a 70 percent loan-to-value (LTV) cap.
Comments are due by October 31, 2013.
See: 78 FR 57928; OCC Press Release.