Federal agencies have pushed back the comment period for the Risk Retention Rule enacted under Dodd-Frank. Under this proposal, mortgage lenders and bond issuers will not be able to pass off loans to the secondary market without accepting some of the credit risk. These lenders and bond issuers will be required to retain 5% of the loan package they sell to investors. By mortgage professionals retaining 5% of the “risk”, regulators hope this will help the industry manage responsibility in terms of “risky lending” and “potential losses.”
Originally, all comments to the proposed law were due by this Friday, June 10, 2011. However federal agencies, which include the Board of Governors of the Federal Reserve, Federal Deposit Insurance Corporation (FDIC), Federal Housing Finance Agency (FHFA), Department of Housing and Urban Development (HUD), Office of the Comptroller of the Currency (OCC), and U.S. Securities and Exchange Commission (SEC), have extended the comment period to August 1, 2011. The proposed rule has been met with opposition from industry groups, and this extended comment period will allow for greater examination of those concerns as well as those from consumer groups.