The Wall Street Journal is reporting that rules dictating which loans should be exempt from the Dodd Frank’s risk retention requirement are being held up as a diverse set of regulators try to reach consensus.
The risk retention rule which says that issuers of mortgage backed securities must hold on to 5% of the risk of certain types of loans was originally expected to be completed by the end of 2010, but citing people familiar with the negotiations, the spat between regulators in contributing to the delay says the WSJ.
Six federal agencies must sign off on the proposal before it is published for comment. One of those — the Federal Deposit Insurance Corp. — has been insisting that the risk rules also contain new standards for mortgage-servicing companies, which collect mortgage payments and distribute them to investors.
FDIC officials say they floated the idea among fellow regulators as far back as September. They believe the rules are the quickest way to reform the troubled industry, which has been the subject of numerous complaints.
