FRRR_20200304_omb

Supporting Statement for the
Recordkeeping and Disclosure Requirements Associated with Regulation RR
(FR RR1; OMB No. 7100-0372)
Summary
The Board of Governors of the Federal Reserve System (Board), under authority
delegated by the Office of Management and Budget (OMB), has extended for three years,
without revision, the Recordkeeping and Disclosure Requirements Associated with
Regulation RR (FR RR; OMB No. 7100-0372). In 2014, the Board, Office of the Comptroller of
the Currency (OCC), Federal Deposit Insurance Corporation (FDIC) (collectively, the Federal
banking agencies), U.S. Securities and Exchange Commission (SEC), Federal Housing Finance
Agency (FHFA), and Department of Housing and Urban Development (HUD) (collectively, the
agencies) adopted a joint final rule (credit risk retention rule) that implemented the credit risk
retention requirements of section 15G of the Securities Exchange Act of 1934 (Exchange Act),2
which was added by section 941 of the Dodd-Frank Wall Street Reform and Consumer
Protection Act (Dodd-Frank Act).3 The Board’s credit risk retention rule, which applies to any
securitizer of asset-backed securities (securitizer) that is a state member bank (SMB) or a
subsidiary of an SMB, is codified in the Board’s Regulation RR - Credit Risk Retention (12 CFR
244). The SEC’s rules regarding credit risk retention (17 CFR 246) apply to any securitizer that
is not an insured depository institution (IDI) or a subsidiary of an IDI. Regulation RR and the
SEC’s credit risk retention rule include a number of mandatory recordkeeping and disclosure
requirements.
The Board’s FR RR information collection accounts for the burden associated with the
Board’s Regulation RR, as well as the burden associated with the SEC’s credit risk retention rule
for securitizers that are, or are a subsidiary of, a bank holding company, savings and loan holding
company, intermediate holding company, Edge or agreement corporation, foreign banking
organization, or nonbank financial company supervised by the Board. The estimated total annual
burden for the FR RR is 2,114 hours.
Background and Justification
As required by section 15G of the Exchange Act, the credit risk retention rule generally
(1) requires a securitizer to retain not less than 5 percent of the credit risk of any asset that the
securitizer, through the issuance of an asset-backed security (ABS), transfers, sells, or conveys to
a third party and (2) prohibits a securitizer from directly or indirectly hedging or otherwise
transferring the credit risk that the securitizer is required to retain under section 15G and the
agencies’ implementing rules. The rule provides a number of options, described further below,
for complying with section 15G’s risk retention requirements.
The credit risk retention rule exempts certain types of securitization transactions from
1

The internal Agency Tracking Number previously assigned by the Board to this information collection was
“Reg RR.” The Board is changing the internal Agency Tracking Number to “FR RR” for the purpose of consistency.
2
15 U.S.C. § 78o-11.
3
Public Law 111-203, 124 Stat. 1376 (2010)

these risk retention requirements and authorizes the agencies to exempt or establish a lower risk
retention requirement for other types of securitization transactions. In addition, the rule provides
that a securitizer may retain less than 5 percent of the credit risk of commercial mortgages,
commercial loans, and automobile loans that are transferred, sold, or conveyed through the
issuance of ABS interests by the securitizer if the loans meet underwriting standards established
by the Federal banking agencies.
The credit risk retention rule sets forth permissible forms of risk retention for
securitizations that involve issuance of ABS, as well as exemptions from the risk retention
requirements. The agencies believe that the recordkeeping and disclosure requirements
associated with the various forms of risk retention enhance market discipline, help ensure the
quality of the assets underlying a securitization transaction, and assist investors in evaluating
transactions. No other federal law mandates these recordkeeping and disclosures requirements.
Description of Information Collection
The recordkeeping and disclosure requirements in the credit risk retention rule are set
forth below. Compliance with the information collection is mandatory.
Standard Risk Retention. Section 244.4 of Regulation RR and section 246.4 of the
SEC’s credit risk retention rule set forth the conditions that must be met by sponsors of a
securitization that elects to use the credit risk retention rule’s standard risk retention option,
which may consist of an eligible vertical interest or an eligible horizontal residual interest, as
defined by the rule, or any combination thereof. Sections 244.4(c) of Regulation RR and section
246.4(c) of the SEC’s credit risk retention rule set forth the disclosure requirements for a sponsor
that uses the standard risk retention option.
A reasonable period of time prior to the sale of an ABS issued in the same offering of
ABS interests, a sponsor retaining any eligible horizontal residual interest (or funding a
horizontal cash reserve account), is required to disclose to potential investors: the fair value (or a
range of fair values and the method used to determine such range) of the eligible horizontal
residual interest that the sponsor expects to retain at the closing of the securitization transaction;
the material terms of the eligible horizontal residual interest; the methodology used to calculate
the fair value (or range of fair values) of all classes of ABS interests; the key inputs and
assumptions used in measuring the estimated total fair value (or range of fair values) of all
classes of ABS interests, including, to the extent applicable, certain enumerated items; and a
description of the reference data set or other historical information used to develop the key inputs
and assumptions. A reasonable time after the closing of the securitization transaction, the
sponsor must disclose: the fair value of the eligible horizontal residual interest retained by the
sponsor; the fair value of the eligible horizontal residual interest required to be retained by the
sponsor; and a description of any material differences between the methodology used in
calculating the fair value disclosed prior to sale and the methodology used to calculate the fair
value at the time of closing. If the sponsor retains risk through the funding of an eligible
horizontal cash reserve account, the sponsor must also disclose the amount placed by the sponsor
in the horizontal cash reserve account at closing, the fair value of the eligible horizontal residual
interest that the sponsor is required to fund through such account, and a description of such

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account.
For eligible vertical interests, a reasonable period of time prior to the sale of an ABS
issued in the same offering of ABS interests, the sponsor is required to disclose to potential
investors: the form of the eligible vertical interest; the percentage that the sponsor is required to
retain; and a description of the material terms of the vertical interest and the amount the sponsor
expects to retain at closing. A reasonable time after the closing of the securitization transaction,
the sponsor must disclose the amount of vertical interest retained by the sponsor at closing, if
that amount is materially different from the amount disclosed earlier.
Section 244.4(d) of Regulation RR and section 246.4(d) of the SEC’s credit risk retention
rule require a sponsor to retain the certifications and disclosures by section 244.4 of
Regulation RR and section 246.4 of the SEC’s credit risk retention rule. The sponsor must retain
these records until three years after all ABS interests are no longer outstanding.
Revolving Pool Securitizations. Section 244.5 of Regulation RR and section 246.5 of
the SEC’s credit risk retention rule require sponsors relying on the revolving pool securitization
risk retention option to disclose in writing to potential investors, a reasonable period of time prior
to the sale of an ABS, the material terms of the seller’s interest and the percentage of the seller’s
interest that the sponsor expects to retain at the closing of the transaction. A reasonable time after
the closing of the transaction, the sponsor must disclose in writing: the amount of the seller’s
interest that the sponsor retained at closing, if materially different from the amount previously
disclosed; the material terms of any horizontal risk retention offsetting the seller’s interest under
sections 244.5(g), 244.5(h), and 244.5(i) of Regulation RR or sections 246.5(g), 246.5(h), or
246.5(i) of the SEC’s credit risk retention rule, as applicable; and the fair value of any horizontal
risk retention retained by the sponsor. Additionally, a sponsor must retain these disclosures in its
records until three years after all are ABS interests are no longer outstanding.
Eligible ABCP Conduits. Section 244.6 of Regulation RR and section 246.6 of the
SEC’s credit risk retention rule address the requirements for sponsors utilizing the eligible assetbacked commercial paper (ABCP) conduit risk retention option. The sponsor must disclose to
each purchaser of ABCP, before or at the time of the first sale of ABCP to such purchaser and at
least monthly thereafter to each holder of commercial paper issued by the ABCP conduit: the
name and form of organization of the regulated liquidity provider that provides liquidity
coverage to the eligible ABCP conduit, including a description of the material terms of such
liquidity coverage, and notice of any failure to fund; and with respect to each ABS interest held
by the ABCP conduit, the asset class or brief description of the underlying securitized assets, the
standard industrial category code for each originator-seller that retains an interest in the
securitization transaction, and a description of the percentage amount and form of interest
retained by each originator-seller.
A sponsor relying on the eligible ABCP conduit risk retention option shall maintain and
adhere to policies and procedures to monitor compliance by each relevant originator-seller. If the
ABCP conduit sponsor determines that an originator-seller is no longer in compliance, the
sponsor must promptly notify the holders of the ABCP in writing of the name and form of
organization of any originator-seller that fails to properly retain risk; the amount of ABS interests

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issued by an intermediate special purpose vehicle (SPV) of such originator-seller and held by the
ABCP conduit; the name and form of organization of any originator-seller that hedges, directly
or indirectly through an intermediate SPV; the risk retention in violation of the rule; the amount
of ABS interests issued by an intermediate SPV of such originator-seller and held by the ABCP
conduit; and any remedial actions taken by the ABCP conduit sponsor or other party with respect
to such ABS interests.
Commercial Mortgage-Backed Securities. Section 244.7 of Regulation RR and section
246.7 of the SEC’s credit risk retention rule set forth the requirements for sponsors relying on the
commercial mortgage-backed securities risk retention option, and requires a sponsor to make, a
reasonable period of time prior to the sale of the ABS as part of the securitization transaction, the
following disclosures to potential investors: the name and form of organization of each initial
third-party purchaser; each initial third-party purchaser’s experience in investing in commercial
mortgage-backed securities; other material information regarding each initial third-party
purchaser or each initial third-party purchaser’s retention of the interest; the fair value and
purchase price of the eligible horizontal residual interest retained by each third-party purchaser;
the fair value of the eligible horizontal residual interest that the sponsor would have retained if
the sponsor had relied on retaining an eligible horizontal residual interest under the standard risk
retention option; a description of the material terms of the eligible horizontal residual interest
retained by each initial third-party purchaser, including the same information as is required to be
disclosed by sponsors retaining horizontal interests pursuant to section 244.4; the material terms
of the applicable transaction documents with respect to the Operating Advisor; and
representations and warranties concerning the securitized assets, a schedule of any securitized
assets that are determined not to comply with such representations and warranties, and the
factors used to determine that such securitized assets should be included in the pool
notwithstanding that they did not comply with the representations and warranties. A sponsor
relying on the commercial mortgage-backed securities risk retention option is also required to
include in the underlying securitization transaction documents certain provisions related to the
appointment of an operating advisor, to maintain and adhere to policies and procedures to
monitor compliance by third-party purchasers with regulatory requirements, and to notify the
holders of the ABS interests in the event of noncompliance by a third-party purchaser with such
regulatory requirements.
Federal National Mortgage Association and Federal Home Loan Mortgage
Corporation ABS. Section 244.8(c) of Regulation RR and section 246.8(c) of the SEC’s credit
risk retention rule require that a sponsor relying on the Federal National Mortgage Association
and Federal Home Loan Mortgage Corporation risk retention option disclose to investors a
description of the manner in which it has met the credit risk retention requirements.
Open Market Collateralized Loan Obligations (CLOs). Section 244.9 of
Regulation RR and section 246.9 of the SEC’s credit risk retention rule set forth the requirements
for sponsors relying on the open market CLO risk retention option.4 A reasonable period of time
4

In 2018, the U.S. Court of Appeals for the District of Columbia Circuit held that mangers of open-market CLOs
are not “securitizers” under section 15G of the Exchange Act and therefore may not be made subject to the agencies’
credit risk retention rule. See Loan Syndications and Trading Association v. Securities and Exchange Commission,
882 F.3d 220 (D.C. Cir. 2018).

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prior to the sale of ABS in the securitization transaction, a sponsor must disclose to potential
investors a complete list of, and certain information related to, every asset held by an open
market CLO and the full legal name and form of organization of the CLO manager.
Qualified Tender Option Bonds. Section 244.10 of Regulation RR and section 246.10
of the SEC’s credit risk retention rule set forth the requirements for sponsors relying on the
qualified tender option bond risk retention option, and requires the disclosure, a reasonable
period of time prior to the sale of the ABS as part of the securitization transaction, to potential
investors of: the name and form of organization of the qualified tender option bond entity, a
description of the form and subordination features of the retained interest in accordance with the
disclosure obligations associated with the standard risk retention option, the fair value of any
portion of the retained interest that is claimed by the sponsor as an eligible horizontal residual
interest, and the percentage of ABS interests issued that is represented by any portion of the
retained interest that is claimed by the sponsor as an eligible vertical interest. In addition, to the
extent any portion of the retained interest claimed by the sponsor is a municipal security held
outside of the qualified tender option bond entity, the sponsor must disclose the name and form
of organization of the qualified tender option bond entity, the identity of the issuer of the
municipal securities, the face value of the municipal securities deposited into the qualified tender
option bond entity, and the face value of the municipal securities retained outside of the qualified
tender option bond entity by the sponsor or its majority-owned affiliates.
Allocation of Risk Retention to an Originator. Section 244.11 of Regulation RR and
section 246.11 of the SEC’s credit risk retention rule set forth the conditions that apply when the
sponsor of a securitization allocates to originators of securitized assets a portion of the credit risk
the sponsor is required to retain. The sponsor must provide the same disclosures required by
section 244.4(c) of Regulation RR or section 246.6(c) of the SEC’s credit risk retention rule, as
applicable, and must also, a reasonable period of time prior to the sale of the ABS as part of the
securitization transaction, disclose the following to potential investors: the name and form of
organization of any originator that acquired and retained (or will acquire and retain) an interest in
the transaction; a description of the form, amount and nature of such interest; and the method of
payment for such interest. A sponsor relying on this section is also required to maintain and
adhere to policies and procedures that are reasonably designed to monitor originator compliance
with the retention amount, hedging, transferring, and pledging requirements and to promptly
notify the holders of the ABS interests issued in the transaction in the event of originator noncompliance with such requirements.
Exemption for Qualified Residential Mortgages and Exemptions for Securitizations
of Certain Three-to-Four Unit Mortgage Loans. Sections 244.13 and 244.19(g) of
Regulation RR and sections 246.13 and 246.19(g) of the SEC’s credit risk retention rule provide
exemptions from the risk retention requirements for qualified residential mortgages and
qualifying three-to-four unit residential mortgage loans that meet certain criteria, including that
the depositor with respect to the securitization transaction certify that it has evaluated the
effectiveness of its internal supervisory controls and concluded that the controls are effective,
and that the sponsor provide a copy of the certification to potential investors prior to sale of
asset-backed securities in the issuing entity. In addition, sections 244.13(c)(3) and 244.19(g)(3)
of Regulation RR and sections 246.13(c)(3) and 246.19(g)(3) of the SEC’s credit risk retention

5

rule provide that a sponsor that has relied upon the exemptions will not lose the exemptions if,
after closing of the transaction, it is determined that one or more of the residential mortgage
loans does not meet all of the criteria, provided that the depositor complies with certain specified
requirements, including prompt notice to the holders of the asset-backed securities of any loan
that is required to be repurchased by the sponsor, the amount of such repurchased loan, and the
cause for such repurchase.
Qualifying Commercial Loans, Commercial Real Estate Loans, and Automobile
Loans. Section 244.15 of Regulation RR and section 246.15 of the SEC’s credit risk retention
rule provide exemptions from the risk retention requirements for qualifying commercial loans
that meet the criteria specified in section 244.16 of Regulation RR or section 246.16 of the
SEC’s credit risk retention rule, qualifying commercial real estate (CRE) loans that meet the
criteria specified in section 244.17 of Regulation RR or section 246.17 of the SEC’s credit risk
retention rule, and qualifying automobile loans that meet the criteria specified in section 244.18
of Regulation RR or section 246.18 of the SEC’s credit risk retention rule. A sponsor must
disclose to potential investors, a reasonable period of time prior to the sale of asset-backed
securities of the issuing entity: a description of the manner in which the sponsor determined the
aggregate risk retention requirement for the securitization transaction after including qualifying
commercial loans, qualifying CRE loans, or qualifying automobile loans with 0 percent risk
retention. In addition, the sponsor is required to disclose descriptions of the qualifying
commercial loans, qualifying CRE loans, and qualifying automobile loans (qualifying assets),
and descriptions of the assets that are not qualifying assets, and the material differences between
the group of qualifying assets and the group of assets that are not qualifying assets with respect
to the composition of each group’s loan balances, loan terms, interest rates, borrower credit
information, and characteristics of any loan collateral. Additionally, a sponsor must retain the
above disclosures in its records until three years after all ABS interests are no longer outstanding.
Underwriting Standards for Qualifying Commercial Loans, Underwriting
Standards for Qualifying CRE Loans, and Underwriting Standards for Qualifying
Automobile Loans. Sections 244.16, 244.17, and 244.18 of Regulation RR and sections 246.16,
246.17, and 246.18 of the SEC’s credit risk retention rule each require that the depositor of an
asset-backed security certify that it has evaluated the effectiveness of its internal supervisory
controls and concluded that its internal supervisory controls are effective, the sponsor is required
to provide a copy of the certification to potential investors prior to the sale of asset-backed
securities in the issuing entity; and the sponsor must promptly notify the holders of the assetbacked securities of any loan included in the transaction that is required to be cured or
repurchased by the sponsor, including the principal amount of such loan and the cause for such
cure or repurchase. Additionally, a sponsor must retain the disclosures required in sections
244.16(a)(8), 244.17(a)(10) and 244.18(a)(8) of Regulation RR or sections 246.16(a)(8),
246.17(a)(10) and 246.18(a)(8) of the SEC’s credit risk retention rule, as applicable, in its
records until three years after all ABS interests are no longer outstanding.
Respondent Panel
The FR RR respondent panel comprises securitizers that are, or are a subsidiary of, a state
member bank, bank holding company, savings and loan holding company, intermediate holding

6

company, Edge or agreement corporation, foreign banking organization, or nonbank financial
company supervised by the Board.
Time Schedule for Information Collection
The recordkeeping and disclosure requirements associated with this information
collection are event-generated.
Public Availability of Data
There is no data related to this information collection available to the public.
Legal Status
The FR RR is authorized pursuant to section 15G of the Exchange Act, which authorizes
the Board, jointly with the OCC, FDIC, and SEC, to prescribe risk retention regulations
(15 U.S.C. § 78o-11). The FR RR is mandatory.
The FR RR contains recordkeeping and disclosure requirements that are not submitted to
the Board, so the issue of confidentiality will not normally arise. If the Board’s examiners retain
a copy of the records as part of an examination, the records may be exempt from disclosure
under exemption 8 of the Freedom of Information Act, which exempts from disclosure matters
that are “contained in or related to examination, operating, or condition reports prepared by, on
behalf of, or for the use of an agency responsible for the regulation or supervision of financial
institutions” (5 U.S.C. § 552(b)(8)).
Consultation Outside of the Agency
The credit risk retention rule was adopted on an interagency basis, as discussed above.
The Board consulted with the OCC, FDIC, and SEC with respect to the extension, without
revision, of this collection of information.
Public Comments
On September 30, 2019, the Board published an initial notice in the Federal Register
(84 FR 51569) requesting public comment for 60 days on the extension, without revision, of the
FR RR. The comment period for this notice expired on November 29, 2019. The Board did
receive any comments. On January 17, 2020, the Board published a final notice in the Federal
Register (85 FR 3045).
Estimate of Respondent Burden
As shown in the table below, the estimated total annual burden for the FR RR is 2,114
hours. The burden estimates below were developed by the Board in consultation with the OCC,
FDIC, SEC, FHFA, and HUD. To determine the estimated total burden for the recordkeeping
and disclosure requirements contained in the credit risk retention rule, the agencies first

7

estimated the universe of sponsors that would be required to comply with the recordkeeping and
disclosure requirements. The agencies estimate that approximately 270 unique sponsors conduct
ABS offerings each year. This estimate was based on the average number of ABS offerings from
2004 through 2013 reported by the ABS database Asset-Backed Alert for all non-CMBS
transactions and by Commercial Mortgage Alert for all CMBS transactions. Of the 270 sponsors,
the agencies have assigned 8 percent of these sponsors to the Board, 12 percent to the FDIC, 13
percent to the OCC, and 67 percent to the SEC. The agencies have determined that these
estimates continue to be accurate.
Next, the agencies estimated the burden per response that is associated with each
recordkeeping and disclosure requirement, and then estimated how frequently the entities would
make the required disclosure by estimating the proportionate amount of offerings per year for
each agency. To obtain the estimated number of responses (equal to the number of offerings) for
each option in subpart B of the rule, the agencies multiplied the number of offerings estimated to
be subject to the base risk retention requirements by the sponsor percentages described above.
These recordkeeping and disclosure requirements represent less than 1 percent of the Board’s
total paperwork burden.

FR RR
Sections 244.4 and 246.4
Standard Risk Retention:
Horizontal Interest
Recordkeeping
Disclosure
Vertical Interest
Recordkeeping
Disclosure
Combined Horizontal and
Vertical Interests
Recordkeeping
Disclosure
Sections 244.5 and 246.5
Recordkeeping
Disclosure
Sections 244.6 and 246.6
Recordkeeping
Disclosure
Sections 244.7 and 246.7
Recordkeeping
Disclosure

Estimated
number of
respondents5

Estimated
Annual
average hours
frequency
per response

Estimated
annual burden
hours

9
9

1
1

0.5
5.5

5
50

9
9

1
1

0.5
2.0

5
18

9
9

1
1

0.5
7.5

5
68

9
9

1
1

0.5
7.0

5
63

9
9

1
1

20.0
3.0

180
27

9
9

1
1

30.0
20.75

270
187

5

Of these respondents, none are considered small entities as defined by the Small Business Administration (i.e.,
entities with less than $600 million in total assets), https://www.sba.gov/document/support--table-size-standards.

8

Sections 244.8 and 246.8
Disclosure
Sections 244.9 and 246.9
Disclosure
Sections 244.10 and 246.10
Disclosure
Sections 244.11 and 246.11
Recordkeeping
Disclosure
Sections 244.13, 244.19(g),
246.13, and 246.19(g)
Recordkeeping
Disclosure
Sections 244.15 and 246.15
Recordkeeping
Disclosure
Sections 244.16 and 246.16
Recordkeeping
Disclosure
Sections 244.17 and 246.17
Recordkeeping
Disclosure
Sections 244.18 and 246.18
Recordkeeping
Disclosure

9

1

1.5

14

9

1

20.25

182

9

1

6.0

54

3
3

1
1

20.0
2.5

60
8

8
8

1
1

40.0
1.25

320
10

10
10

1
1

0.5
20.0

5
200

3
3

1
1

40.5
1.25

122
4

3
3

1
1

40.5
1.25

122
4

3
3

1
1

40.5
1.25

122
4

Total

2,114

The estimated total annual cost to the public for this information collection is $121,766.6
Sensitive Questions
This information collection contains no questions of a sensitive nature, as defined by
OMB guidelines.
Estimate of Cost to the Federal Reserve System
The estimated cost to the Federal Reserve System is negligible.

6

Total cost to the public was estimated using the following formula: percent of staff time, multiplied by annual
burden hours, multiplied by hourly rates (30% Office & Administrative Support at $19, 45% Financial Managers at
$71, 15% Lawyers at $69, and 10% Chief Executives at $96). Hourly rates for each occupational group are the
(rounded) mean hourly wages from the Bureau of Labor and Statistics (BLS), Occupational Employment and Wages
May 2018, published March 29, 2019, https://www.bls.gov/news.release/ocwage.t01.htm. Occupations are defined
using the BLS Standard Occupational Classification System, https://www.bls.gov/soc/.

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