FRRR_20230329_omb

Supporting Statement for the
Recordkeeping and Disclosure Requirements Associated with Regulation RR
(FR RR; 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),1
which was added by section 941 of the Dodd-Frank Wall Street Reform and Consumer
Protection Act (Dodd-Frank Act).2 The Board’s credit risk retention rule, which applies to any
securitizer of asset-backed securities (securitizer) that is a state member bank or a subsidiary of
a state member bank, is codified in the Board’s Regulation RR - Credit Risk Retention (12 CFR
Part 244). Regulation RR includes a number of mandatory recordkeeping and disclosure
requirements. 3
The estimated total annual burden for the FR RR is 340 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 credit risk retention 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
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
1

15 U.S.C. § 78o-11.
Public Law 111-203, 124 Stat. 1376 (2010).
3
The FR RR previously took burden for the SEC’s credit risk retention rule insofar as it applies to 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 extension of the FR RR does not include burden for the SEC’s rule, because it is not a collection
of information conducted or sponsored by the Board.
2

by the federal banking agencies and certain other requirements.
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 sets 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. Section 244.4(c)
of Regulation RR sets 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, at least certain enumerated items;
and a summary description of the reference data set or other historical information used to
develop the key inputs and assumptions. The disclosures must include, at a minimum,
descriptions of all inputs and assumptions that either could have a material impact on th e fair
value calculation or would be material to a prospective investor’s ability to evaluate the
sponsor’s fair value calculations, as well as other information specified in section
244.4(c)(1)(i)(F) of Regulation RR. 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 the
material terms of such account.

2

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 requires a sponsor to retain the certifications and
disclosures required by section 244.4 of Regulation RR. The sponsor must retain these records
until three years after all ABS interests are no longer outstanding. 4
Revolving Pool Securitizations. Section 244.5 of Regulation RR requires 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; 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 ABS
interests are no longer outstanding.
Eligible ABCP Conduits. Section 244.6 of Regulation RR addresses the requirements
for sponsors utilizing the eligible asset-backed 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
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
4

As discussed in the preamble to the final credit risk retention rule, the recordkeeping retention periods included in
the credit risk retention rule will allow for a sufficient period of review of the records by the Board. 79 FR 77601,
77677 (December 24, 2014).

3

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 sets 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, including certain enumerated items; 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 requires 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 sets forth the requirements for sponsors relying on the open market CLO risk
retention option.5 A reasonable period of time 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
5

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).

4

of organization of the CLO manager. The sponsor must also disclose a complete list of, and
certain information related to, every asset held by an open market CLO at least annually
thereafter.
Qualified Tender Option Bonds. Section 244.10 of Regulation RR sets 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 sets
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 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 non-compliance 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 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 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

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complies with certain specified requirements, including prompt notice to the holders of the assetbacked 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 provides exemptions from the risk retention
requirements for qualifying commercial loans that meet the criteria specified in section 244.16 of
Regulation RR, qualifying commercial real estate (CRE) loans that meet the criteria specified in
section 244.17 of Regulation RR, and qualifying automobile loans that meet the criteria specified
in section 244.18 of Regulation RR. 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 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 asset-backed 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 in its records until three years
after all ABS interests are no longer outstanding.
Respondent Panel
The FR RR panel comprises securitizers that are, or are a subsidiary of, a state member
bank.
Frequency
The FR RR is retained and disclosed on an event-generated basis.

6

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 requires
the Board, jointly with the OCC, FDIC, and SEC, to prescribe risk retention regulations for
securitizers (15 U.S.C. § 78o-11). The FR RR is mandatory.
Records kept and information disclosed pursuant to the requirements of the FR RR are
not submitted to the Board, so the issue of confidentiality will not normally arise. If the Board’s
examiners obtain 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 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 information collection.
Public Comments
On November 23, 2022, the Board published an initial notice in the Federal Register (87
FR 71637) requesting public comment for 60 days on the extension, without revision, of the
FR RR. The comment period for this notice expired on January 23, 2023. The Board did not
receive any comments. The Board adopted the extension, without revision, of the FR RR as
originally proposed. On March 29, 2023, the Board published a final notice in the Federal
Register (88 FR 18546).
Estimate of Respondent Burden
As shown in the table below, the estimated total annual burden for the FR RR is 340
hours. To generate a universe of potential securitizers, the Board referenced all state member
banks that reported a non-zero amount in either (1) outstanding principal balance of assets sold
and securitized with servicing retained or with recourse or other seller-provided credit
enhancements6 or (2) amount of loans and leases held for investment, net of allowance, and held
6

Schedule RC-S, item 1 on FFIEC 031 and FFIEC 041.

7

for sale held by consolidated variable interest entities (VIEs)7 in the Federal Financial
Institutions Examination Council (FFIEC) Consolidated Reports of Condition and Income (Call
Reports) (FFIEC 031, FFIEC 041, and FFIEC 051; OMB No. 7100-0036) for the quarter ending
on December 31 for the years 2018, 2019, and 2020. This search resulted in a list of 239 state
member banks that were potential securitizers.
Using this list, the Board searched for each state member bank’s name in FitchConnect’s
repository of ABS offerings (deals) 8 and compiled a list of deals for which a state member bank
was listed as the issuer, sponsor, originator, or servicer of the offering. For state member banks
for which deals were not found on FitchConnect, the following method was followed. The
queried Call Report item labeled (1) in the list above includes assets sold with recourse or other
seller-provided credit enhancements, which are outside the scope of the Credit Risk Retention
rule. To identify state member banks which securitized from those that did not, a $75 million
threshold of year-over-year growth in that item was used to identify new securitizations in 2018,
2019, and 2020, based on the assumption that growth of less than $75 million would be unlikely
to reflect sponsorship or issuance of new term ABS offerings during that period. These methods
yielded a list of zero state member banks. Therefore, the Board is estimating one respondent for
the purposes of the Paperwork Reduction Act submission. These recordkeeping and disclosure
requirements represent less than 1 percent of the Board’s total paperwork burden.

FR RR
Section 244.4
Standard Risk Retention:
Horizontal Interest
Recordkeeping
Disclosure
Vertical Interest
Recordkeeping
Disclosure
Combined Horizontal and
Vertical Interests
Recordkeeping
Disclosure
Section 244.5
Recordkeeping
Disclosure
Section 244.6
Recordkeeping
Disclosure

Estimated
number of
respondents9

Estimated
annual
frequency

1
1

1
1

0.5
5.5

1
6

1
1

1
1

0.5
2

1
2

1
1

1
1

0.5
7.5

1
8

1
1

1
1

0.5
7

1
7

1
1

1
1

7

Estimated
Estimated
average hours annual burden
per response
hours

20
3

20
3

Schedule RC-V, item 1(c) on FFIEC 031 and FFIEC 041.
See http://app.fitchconnect.com, using ABS, CMBS, and RMBS sections under the Sectors tab, last accessed in
August 2022.
9
Of these respondents, none are considered small entities as defined by the Small Business Administration (i.e.,
entities with less than $850 million in total assets), https://www.sba.gov/document/support-table-size-standards.
8

8

Section 244.7
Recordkeeping
Disclosure
Section 244.8
Disclosure
Section 244.9
Disclosure
Section 244.10
Disclosure
Section 244.11
Recordkeeping
Disclosure
Sections 244.13 and 244.19(g)
Recordkeeping
Disclosure
Section 244.15
Recordkeeping
Disclosure
Section 244.16
Recordkeeping
Disclosure
Section 244.17
Recordkeeping
Disclosure
Section 244.18
Recordkeeping
Disclosure
Total

1
1

1
1

30
20.75

30
21

1

1

1.5

2

1

1

20.25

20

1

1

6

6

1
1

1
1

20
2.5

20
3

1
1

1
1

40
1.25

40
1

1
1

1
1

0.5
20

1
20

1
1

1
1

40.5
1.25

41
1

1
1

1
1

40.5
1.25

41
1

1
1

1
1

40.5
1.25

41
1
340

The estimated total annual cost to the public for the FR RR is $20,553.10
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.

10

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 $21, 45% Financial Managers at
$74, 15% Lawyers at $71, and 10% Chief Executives at $102). Hourly rates for each occupational group are the
(rounded) mean hourly wages from the Bureau of Labor Statistics (BLS), Occupational Employment and Wages,
May 2021, published March 31, 2022, 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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