U.S. Securities and Exchange Commission issues concept release on RMBS disclosure requirements and potential enhancements to asset-backed securities regulation

The U.S. Securities and Exchange Commission published a concept release seeking public feedback on disclosure requirements for public offerings of residential mortgage-backed securities (RMBS) and on selected elements of its broader regulatory framework for asset-backed securities (ABS). The initiative is positioned as a first step toward reviving the public RMBS market and modernizing ABS regulation, with potential follow-on rulemaking based on comments received. The release highlights that there have been no public RMBS offerings since June 2013, despite more than USD 100 billion of annual RMBS issuance in the Rule 144A market for five of the past six years. It asks whether aspects of Regulation AB II may be contributing to the lack of public issuance, including the RMBS asset-level disclosure requirement that calls for roughly 105 data points per mortgage as a baseline, plus up to 165 additional data points upon specified events. Input is also requested on how to balance investors’ need for obligor information with privacy concerns, including whether to revisit an approach previously proposed in 2014 that would make sensitive obligor data available through an issuer-sponsored website rather than on EDGAR. In addition, the concept release seeks comment on other ABS issues, including whether to harmonize the definition of “asset-backed security” in Regulation AB with the definition in section 3(a)(79) of the Securities Exchange Act of 1934.