(a) Definitions. For purposes
of this section, the following definitions shall apply:
Currently performing means the
borrower in the mortgage transaction is not currently thirty (30)
days or more past due, in whole or in part, on the mortgage transaction.
Qualified residential mortgage means a “qualified mortgage” as defined in section 129C of the Truth
in Lending Act (15 U.S.C.1639c) and regulations issued thereunder,
as amended from time to time.
(b) Exemption. A sponsor shall be exempt from
the risk retention requirements in subpart B of this part with respect
to any securitization transaction, if:
(1) All of the assets that collateralize
the asset-backed securities are qualified residential mortgages or
servicing assets;
(2) None of the
assets that collateralize the asset-backed securities are asset-backed
securities;
(3) As of the cut-off
date or similar date for establishing the composition of the securitized
assets collateralizing the asset-backed securities issued pursuant
to the securitization transaction, each qualified residential mortgage
collateralizing the asset-backed securities is currently performing;
and
(4) (i)
The depositor with respect to the securitization transaction certifies
that it has evaluated the effectiveness of its internal supervisory
controls with respect to the process for ensuring that all assets
that collateralize the asset-backed security are qualified residential
mortgages or servicing assets and has concluded that its internal
supervisory controls are effective; and
(ii) The evaluation of the effectiveness
of the depositor’s internal supervisory controls must be performed,
for each issuance of an asset-backed security in reliance on this
section, as of a date within 60 days of the cut-off date or similar
date for establishing the composition of the asset pool collateralizing
such asset-backed security; and
(iii) The sponsor provides, or causes to be provided, a copy of the
certification described in paragraph (b)(4)(i) of this section to
potential investors a reasonable period of time prior to the sale
of asset-backed securities in the issuing entity, and, upon request,
to the Commission and its appropriate Federal banking agency, if any.
(c) Repurchase
of loans subsequently determined to be non-qualified after closing. A sponsor that has relied on the exemption provided in paragraph
(b) of this section with respect to a securitization transaction shall
not lose such exemption with respect to such transaction if, after
closing of the securitization transaction, it is determined that one
or more of the residential mortgage loans collateralizing the asset-backed
securities does not meet all of the criteria to be a qualified residential
mortgage provided that :
(1) The depositor complied with the certification
requirement set forth in paragraph (b)(4) of this section;
(2) The sponsor repurchases the loan(s)
from the issuing entity at a price at least equal to the remaining
aggregate unpaid principal balance and accrued interest on the loan(s)
no later than 90 days after the determination that the loans do not
satisfy the requirements to be a qualified residential mortgage; and
(3) The sponsor promptly notifies,
or causes to be notified, the holders of the asset-backed securities
issued in the securitization transaction of any loan(s) included in
such securitization transaction that is (or are) required to be repurchased
by the sponsor pursuant to paragraph (c)(2) of this section, including
the amount of such repurchased loan(s) and the cause for such repurchase.
