Federal Housing Finance Agency Print
Home / Media / Six Federal Agencies Jointly Approve Final Risk Retention Rule
News Release

Six Federal Agencies Jointly Approve Final Risk Retention Rule


Joint Release

Board of Governors of the Federal Reserve System

Department of Housing and Urban Development

Federal Deposit Insurance Corporation

Federal Housing Finance Agency

Office of Comptroller of the Currency

Securities and Exchange Commission​ 

Six federal agencies approved a final rule requiring sponsors of securitization transactions to retain risk in those transactions.  The final rule implements the risk retention requirements in the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act).

The final rule is being issued jointly by the Board of Governors of the Federal Reserve System, the Department of Housing and Urban Development, the Federal Deposit Insurance Corporation, the Federal Housing Finance Agency, the Office of the Comptroller of the Currency, and the Securities and Exchange Commission.  As provided under the Dodd-Frank Act, the Secretary of the Treasury, as Chairperson of the Financial Stability Oversight Council, played a coordinating role in the joint agency rulemaking. 

The final rule largely retains the risk retention framework contained in the proposal issued by the agencies in August 2013 and generally requires sponsors of asset-backed securities (ABS) to retain not less than five percent of the credit risk of the assets collateralizing the ABS issuance.  The rule also sets forth prohibitions on transferring or hedging the credit risk that the sponsor is required to retain.

As required by the Dodd-Frank Act, the final rule defines a “qualified residential mortgage” (QRM) and exempts securitizations of QRMs from the risk retention requirement.  The final rule aligns the QRM definition with that of a qualified mortgage as defined by the Consumer Financial Protection Bureau.  The final rule also requires the agencies to review the definition of QRM no later than four years after the effective date of the rule with respect to the securitization of residential mortgages and every five years thereafter, and allows each agency to request a review of the definition at any time.  The final rule also does not require any retention for securitizations of commercial loans, commercial mortgages, or automobile loans if they meet specific standards for high quality underwriting.  

The final rule will be effective one year after publication in the Federal Register for residential mortgage-backed securitizations and two years after publication for all other securitization types.

12/24/2014:  Final Rule - Credit Risk Retention in Federal Register.




Federal Reserve Board Eric Kollig   (202) 452-2955
FDIC    David Barr   (202) 898-6992
FHFA   Stefanie Johnson  (202) 649-3030
HUD     Cameron French  (202) 708-0980
OCC    Stephanie Collins  (202) 649-6870
SEC     Office of Public Affairs (202) 551-4120​

© 2016 Federal Housing Finance Agency