Final Credit Risk Retention Rules Adopted for Asset Backed Securities and Residential Mortgage Backed Securities

October 28, 2014

The Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency, Department of Housing and Urban Development, Federal Housing Finance Agency, and Securities and Exchange Commission (the “Regulators”) adopted the final regulations (the “Final Rules”) on October 21 and October 22, 2014, implementing Section 941 of the Dodd-Frank Act which generally requires that a sponsor of a securitization retain at least 5% of the credit risk of any asset that the sponsor, through the issuance of an asset-backed security (“ABS”), transfers, sells or conveys to a third party. The Regulators initially proposed rules to implement Section 941 of the Dodd-Frank Act over three years ago (the “First Proposal”) and issued a second set of proposed rules in August 2013 (the “Re-proposal”).

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