In October 2014, the SEC, FDIC, Federal Reserve, OCC, FHFA and HUD (the Joint Regulators) adopted a final rule (the Final Rule) implementing the requirements of Section 15G of the Exchange Act. Section 15G (which was added pursuant to Section 941 of the Dodd-Frank Act) required the Joint Regulators to prescribe regulations to:

      1. Require any securitizer of asset-backed securities (ABS) to retain at least 5% of the credit risk related to that securitization; and
      2. Restrict the transfer, hedging or pledge of the risk that the sponsor is required to retain.

The Joint Regulators initially proposed the credit risk retention rule in April 2011 and, in response to extensive comments, re-proposed the rule in August 2013 pursuant to a second joint notice of proposed rulemaking (the Re-Proposed Rule). The Final Rule retains the framework of the Re-Proposed Rule.

The Final Rule will be effective for all asset classes other than RMBS two years following publication of the Final Rule in the Federal Register.

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