CreditRiskRetention.SS.2021

SUPPORTING STATEMENT
FOR THE PAPERWORK REDUCTION ACT INFORMATION COLLECTION
SUBMISSION FOR CREDIT RISK RETENTION - REGULATION RR

A.

JUSTIFICATION
Circumstances Making the Collection of Information Necessary

The Commission adopted Credit Risk Retention (Regulation RR) recordkeeping and
disclosure requirements to implement section 15G of the Securities and Exchange Act of 1934
(Exchange Act) , as added by section 941(b) of the Dodd-Frank Wall Street Reform and
Consumer Protection Act of 2010 (Dodd-Frank Act).
The generally requires a securitizer of any asset-backed security (ABS) to retain an
economic interest equal to not less than five percent of the credit risk of the assets that the
securitizer, through the issuance of ABS interests, transfers, sells, or conveys to a third party.
The final rule specifies the permissible types, forms, and amounts of credit risk retention, and
establishes certain exemptions for securitizations collateralized by assets that meet specified
underwriting standards or that otherwise qualify for an exemption.
The information collection pursuant to Regulation RR is triggered by specific events.
There are no required reporting forms associated with Regulation RR.
2.

Purpose and Use of the Information Collection

The purpose of Regulation RR is to implement section 15G of the Exchange Act, as
added by section 941(b) of the Dodd-Frank Act. Section 15G generally requires the securitizer
of ABS to retain not less than five percent of the credit risk of the assets collateralizing the ABS.
Section 15G includes a variety of exemptions from these requirements.
The disclosure requirements are an integral part of and specifically tailored to each of the
permissible forms of risk retention. The disclosure requirements provide investors with material
information concerning the sponsor’s retained interests in a securitization transaction, such as the
amount and form of interest retained by sponsors, and the methodologies and assumptions used
by sponsors to calculate the amount of their risk retention. Further, the disclosures would
provide investors and the Commission with an efficient mechanism to monitor compliance with
the risk retention requirements of the final rule.
3.

Consideration Given to Information Technology

Regulation RR requirement are not filed electronically using the Commission’s
Electronic Data Gathering and Retrieval (EDGAR) system.

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4.

Duplication of Information
We are not aware of any rules that conflict with or substantially duplicate Regulation RR.

5.

Reducing the Burden on Small Entities

The final rule implements the risk retention requirements of section 15G of the Exchange
Act, which, in general, requires the securitizer of ABS to retain not less than five percent of the
credit risk of the assets collateralizing the ABS. The risk retention requirements would apply to
“sponsors,” but based on our data we did not find a significant number of sponsors that are small
entities. As such, the Commission does not believe that the risk retention requirements would
have a significant economic impact on a substantial number of small entities.
6.

Consequences of Not Conducting Collection

The disclosure requirements provide investors with material information concerning the
sponsor’s retained interests in a securitization transaction, as well as provide investors and the
Commission with an efficient mechanism to monitor compliance with the risk retention
requirements of the final rule. Less frequent collection would frustrate the statutory intent of
section 15G of the Exchange Act because investors in ABS would have less information on which
to base an investment decision.
7.

Special Circumstances
There are no special circumstances.

8.

Consultations Outside the Agency

No comments were received on this request during the 60-day comment period prior to
OMB’s review.
9.

Payment or Gift to Respondents
No payment or gift has been provided to any respondents.

10.

Confidentiality
Regulation Risk Retention (“Regulation RR”) is a public document.

11

Sensitive Questions

No information of a sensitive nature, including social security numbers, will be required
under this collection of information. The information collection does not collect personally
identifiable information (PII). The agency has determined that a system of records notice
(SORN) and privacy impact assessment (PIA) are not required in connection with the collection
of information.

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12/13. Estimate of Hours and Cost Burdens
The estimated total annual burden for the recordkeeping and disclosure requirements of
this information collection by the Commission is 17,774 hours, as shown in the table below. The
table provides the estimated annual burden for the 181 sponsors and 854 offerings per year
assigned to the Commission to which Regulation RR applies.
To determine the total paperwork burden for the requirements contained in this proposed
rule, the Federal banking agencies and the Commission (Agencies) first estimated the universe of
sponsors that would be required to comply with the proposed disclosure and recordkeeping
requirements. The Agencies estimate that approximately 270 unique sponsors conduct ABS
offerings per 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, 67 percent
(181) of these sponsors were assigned to the Commission.
Next, the Federal banking agencies and the Commission estimated the burden per
response that would be associated with each disclosure and recordkeeping 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. In making this determination, the
estimate was based on the average number of ABS offerings from 2004 through 2013 (1,275
total annual offerings per year). The following additional estimates were made:





12 offerings per year would be subject to disclosure and recordkeeping requirements
under §__.11, which are divided equally among the four Agencies (i.e., 3 offerings per
year per Agency);
100 offerings per year would be subject to disclosure and recordkeeping requirements
under §§__.13 and __.19(g), which are divided proportionately among the four Agencies
based on the entity percentages described above (i.e., 8 offerings per year for the Board;
12 offerings per year for the FDIC; 13 offerings per year for the OCC; and 67 offerings
per year for the Commission); and
120 offerings per year would be subject to disclosure requirements under §__.15, which
are divided proportionately among the four Agencies based on the entity percentages
described above (i.e., 10 offerings per year subject to §__.15 for the Board, 14 offerings
per year subject to §__.15 for the FDIC; 16 offerings per year subject to §__.15 for the
OCC, and 80 offerings per year subject to §__.15 for the Commission). Of these 120
offerings per year, 40 offerings per year would be subject to disclosure and recordkeeping
requirements under §§__.16, __.17, and __.18, respectively, which are divided
proportionately among the four Agencies based on the entity percentages described above
(i.e., 3 offerings per year subject to each section for the Board, 5 offerings per year
subject to each section for the FDIC; 5 offerings per year subject to each section for the
OCC, and 27 offerings per year subject to each section for the Commission).

To obtain the estimated number of responses (equal to the number of offerings) for each
option in Subpart B of the proposed rule, the Agencies multiplied the number of offerings
estimated to be subject to the base risk retention requirements (i.e., 1,055) by the sponsor

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percentages described above. The result was the number of base risk retention offerings per year
per Agency. For the Commission, this was calculated by multiplying 1,055 offerings per year by
67 percent, which equals 707 offerings per year. This number was then divided by the number of
base risk retention options under Subpart B of the proposed rule (i.e., nine) to arrive at the
estimate of the number of offerings per year per Agency per base risk retention option. For the
Commission, this was calculated by dividing 707 offerings per year by nine options, resulting in
79 offerings per year per base risk retention option.
The total estimated annual burden for each Agency was then calculated by multiplying
the number of offerings per year per section for such Agency by the number of burden hours
estimated for the respective section, then adding these subtotals together. For example, under
§__.10, the Commission multiplied the estimated number of offerings per year for §__.10 (i.e.,
79 offerings per year) by the estimated annual frequency of the response for §__.10 of one
response, and then by the disclosure burden hour estimate for §__.10 of 6.0 hours. Thus, the
estimated annual burden hours for respondents to which the Commission accounts for the burden
hours under §__.10 is 474 hours (79 * 1 * 6.0 hours = 474 hours). For administrative
convenience, the presentation of the totals related to the paperwork burden hours have been
rounded to the nearest whole number. The estimated burden hours are made solely for the
purpose of the Paperwork Reduction Act.
a) Detailed table of proposed changes to annual burden compliance in Collection of
Information.
Estimated
number of
offerings
§__B.4, Standard Risk Retention
Horizontal Interest
Recordkeeping
Disclosures
Vertical Interest
Recordkeeping
Disclosures
Combined Horizontal and
Vertical Interests
Recordkeeping
Disclosures
§__B.5, Revolving Master Trusts
Recordkeeping
Disclosures
§__B.6, Eligible ABCP Conduits
Recordkeeping
Disclosures
§__B.7, Commercial MBS
Recordkeeping
Disclosures

Estimated
annual
frequency

Estimated
average hours
per response

Estimated
annual
burden hours

79
79

1
1

0.5
5.5

40
435

79
79

1
1

0.5
2.0

40
158

79
79

1
1

0.5
7.5

40
593

79
79

1
1

0.5
7.0

40
553

79
79

1
1

20.0
3.0

1,580
237

79
79

1
1

30.0
20.75

2,370
1,639

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§__B.8, FNMA and FHLMC
Disclosures
§__B.9, Open Market CLOs
Disclosures
§__B.10, Qualified Tender
Option Bonds
Disclosures
§__C.11, Allocation of Risk
Retention to an Originator
Recordkeeping
Disclosures
§§__D.13 and __.19(g),
Exemption for Qualified
Residential Mortgages and
Qualifying 3-to-4 Unit
Residential Mortgage Loans
Recordkeeping
Disclosures
§__D.15, Exemptions for
Qualifying Commercial Loans,
Commercial Real Estate Loans,
and Automobile Loans
Recordkeeping
Disclosures
§__D.16, Underwriting
Standards for Qualifying
Commercial Loans
Recordkeeping
Disclosures
§__D.17, Underwriting
Standards for Qualifying CRE
Loans
Recordkeeping
Disclosures
§__D.18, Underwriting
Standards for Qualifying
Automobile Loans
Recordkeeping
Disclosures
Total

79

1

1.5

79

1

20.25

79

1

6.0

474

3
3

1
1

20.0
2.5

60
8

67
67

1
1

40.0
1.25

2,680
84

80
80

1
1

0.5
20.0

40
1,600

27
27

1
1

40.5
1.25

1,094
34

27
27

1
1

40.5
1.25

1,094
34

27
27

1
1

40.5
1.25

1,094
34

1,647

119
1,600

17,774

For disclosures made at the time of the securitization transaction, the Commission
allocates 25 percent of these hours (1,773 hours) to internal burden for all sponsors. For the
remaining 75 percent of these hours, (5,319 hours), the Commission uses an estimate of $400 per
hour for external costs for retaining outside professionals totaling $2,127,750. For disclosures

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made after the time of sale in a securitization transaction, the Commission allocated 75 percent
of the total estimated burden hours (1,565 hours) to internal burden for all sponsors. For the
remaining 25 percent of these hours (522 hours), the Commission uses an estimate of $400 per
hour for external costs for retaining outside professionals totaling $208,650.
We estimate the new Regulation RR will result in a total annual estimated cost burden of
$2,336,400 in professional costs. For administrative convenience, the presentation of the totals
related to the paperwork cost totals have been rounded to the nearest dollar. The estimated cost
burdens are made solely for the purpose of the Paperwork Reduction Act.
b) Detailed table of proposed changes to annual cost burden in Collection of
Information.
Estimate
Burden
Cost
Burden hours
Cost
d annual hours for burden for
for
burden for
burden disclosures disclosures disclosures disclosures
hours
at the time at the time after the time
after the
of
of
of sale
time of sale
transaction transaction
§__B.4,
Standard Risk
Retention
Horizontal
Interest
Disclosures
Vertical
Interest
Disclosures
Combined
Horizontal
and Vertical
Interests
Disclosures
§__B.5,
Revolving
Master Trusts
Disclosures
§__B.6,
Eligible
ABCP
Conduits
Disclosures
§__B.7,
Commercial
MBS
Disclosures

Total cost
burden

434.5

316

$94,800

118.5

$11,850

$106,650

158

118.5

$35,550

39.5

$,3950

$39,500

592.5

592.5

$177,750

553

513.5

$154,050

237

158

1639.25

1560.25

$177,750

39.5

$3,950

$158,000

$47,400

79

$7,900

$55,300

$468,075

79

$7,900

$475,975

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§__B.8,
FNMA and
FHLMC
Disclosures
§__B.9, Open
Market CLOs
Disclosures
§__B.10,
Qualified
Tender Option
Bonds
Disclosures
§__C.11,
Allocation of
Risk
Retention to
an Originator
Disclosures
§§__D.13 and
__.19(g),
Exemption for
Qualified
Residential
Mortgages
and
Qualifying 3to-4 Unit
Residential
Mortgage
Loans
Disclosures
§__D.15,
Exemptions
for Qualifying
Commercial
Loans,
Commercial
Real Estate
Loans, and
Automobile
Loans
Disclosures
§__D.16,
Underwriting
Standards for
Qualifying

118.5

118.5

$35,550

$35,550

1599.75

1599.75

$479,925

474

474

$142,200

7.5

4.5

$1,350

3

$300

$1,650

83.75

16.75

$5,025

67

$6,700

$11,725

1600

1600

$480,000

1580

$158,000

$637,925

$142,200

$480,000

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Commercial
Loans
Disclosures
§__D.17,
Underwriting
Standards for
Qualifying
CRE Loans
Disclosures
§__D.18,
Underwriting
Standards for
Qualifying
Automobile
Loans
Disclosures

33.75

6.75

$2,025

27

$2,700

$4,725

33.75

6.75

$2,025

27

$2,700

$4,725

33.75

6.75

$2,025

27

$2,700

$4,725

Total

14.

$2,127,750

$208,650

$2,336,400

Costs to Federal Government

The annual cost of reviewing and processing disclosure documents, including registration
statements, post-effective amendments, proxy statements, annual reports and other filings of
operating companies amounted to approximately $103,479,690 in fiscal year 2019, based on the
Commission’s computation of the value of staff time devoted to this activity and related
overhead.
15.

Reason for Change in Burden
There is no change in burden.

16.

Information Collection Planned for Statistical Purposes
The information collection is not planned for statistical purposes.

17.

Approval to Omit OMB Expiration Date
The Commission is not seeking approval to omit the expiration date.

18.

Exceptions to Certification for Paperwork Reduction Act Submissions
There are no exceptions to certification for Paperwork Reduction Act submissions.

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B.

STATISTICAL METHODS
The information collection does not employ statistical methods.