Agencies Announce Consideration of Risk Retention Notice of Proposed Rulemaking – NMP Skip to main content

Agencies Announce Consideration of Risk Retention Notice of Proposed Rulemaking

NationalMortgageProfessional.com
Mar 28, 2011

The staffs of the Office of the Comptroller of the Currency (OCC), the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), the U.S. Securities & Exchange Commission (SEC), the Federal Housing Finance Agency (FHFA), and the U.S. Department of Housing & Urban Development (HUD) have announced that the agencies are considering for approval a notice of proposed rulemaking that addresses section 941 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. All of the agencies participating in this joint rulemaking process are expected to consider the rule and a detailed announcement will be made when this process is complete. If approved, the agencies will publish in the Federal Register a notice of proposed rulemaking for public comment. Section 941 requires the agencies to prescribe rules to require that a securitizer retain an economic interest in a material portion of the credit risk for any asset that it transfers, sells, or conveys to a third party. The chairperson of the Financial Stability Oversight Council is tasked with coordinating this rulemaking effort. The proposal includes a section covering ways that the agencies also must implement the statutory exemption from the risk retention requirements for “qualified residential mortgages” (QRMs) with underwriting and product features that historical loan performance data indicate result in a lower risk of default. The proposal mandates that securities backed entirely by QRMs are not subject to any risk retention requirement. The Dodd-Frank Act states that a bank must keep a minimum of a five percent threshold for risk on mortgage securities. However, Dodd-Frank grants an exception for QRMs while leaving regulators to decide what that meant. "The rule before the Board today proposes new standards for retention of credit risk to help ensure that securitizers will hold 'skin in the game,' which will align their interests with those of bondholders," said Sheila Bair, chairman of the FDIC. "This will encourage better underwriting by assuring that originators and securitizers can not escape the consequences of their own lending practices." Click here to read "Risk Retention Proposed Rule: Background and Summary."
Published
Mar 28, 2011
Markets Anxious As Fed Opens 2-Day Meeting

Investors, mortgage brokers & bankers await latest policy statement on fighting inflation

Regulation and Compliance
Jan 25, 2022
Ginnie Mae Streamlines FHA Advanced Loan Modification program

Documentation changes eliminate requirements for recordation and title insurance.

Regulation and Compliance
Jan 24, 2022
'A Long Road To Normal'

Nominated again to lead The Fed, Powell tells Senate committee to expect three rate hikes, but 'if we have to raise interest rates more over time, we will.'

Regulation and Compliance
Jan 11, 2022
CFPB: Complaint Response Worsens At Big 3 Credit Bureaus

Report claims Equifax, Experian, and TransUnion routinely failed to fully respond to consumers with errors.

Regulation and Compliance
Jan 10, 2022
The Fed Names Chairs, Deputy Chairs For 12 Reserve Banks

In recent years, the Federal Reserve System has worked to increase the overall diversity of the Reserve Bank and branch boards of directors and continues to build on those efforts.

Regulation and Compliance
Jan 06, 2022
The Fed: Rate Hike Likely Coming in June

Federal Open Market Committee's December minutes reveal discussion of first hike in federal funds rate in 2Q of 2022, as well as of ending asset purchases by March.

Regulation and Compliance
Jan 05, 2022