Recently, we reported hearing from multiple sources that the final adoption of the securitization credit risk retention rules required by the Dodd-Frank Act was imminent. The final text of those rules, which were originally proposed in 2011 and re-proposed in 2013, was released today. The Federal Deposit Insurance Corporation, the Federal Housing Finance Agency and the Office of the Comptroller of the Currency have voted to approve the rules, and the Board of Governors of the Federal Reserve System, the Securities and Exchange Commission, and the Housing and Urban Development Department are scheduled to vote tomorrow.
While we are still analyzing the final rules, the most important aspects appear to include the following:
The credit risk retention rules will become effective one year after they are published in the Federal Register with respect to residential mortgage-backed securities, and two years after publication with respect to all other asset classes.
The text of the final rules is available at https://www.fdic.gov/news/board/2014/2014-10-21_notice_dis_a_fr.pdf. Watch RegABII.com and morganlewis.com for a comprehensive update of our complete guide to the credit risk retention rules.