Concept Release on Residential Mortgage-Backed Securities Disclosures and Enhancements to Asset-Backed Securities Registration

SECURITIES AND EXCHANGE COMMISSION <CFR>17 CFR Parts 229, 230, 239, 240, and 249</CFR> <DEPDOC>[Release Nos. 33-11391; 34-104102; File No. S7-2025-04]</DEPDOC> <RIN>RIN 3235-AN52</RIN> <SUBJECT>Concept Release on Residential Mortgage-Backed Securities Disclosures and Enhancements to Asset-Backed Securities Registration</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Securities and Exchange Commission. <HD SOURCE="HED">ACTION:</HD> Concept release; request for comments. <SUM> <HD SOURCE="HED">SUMMARY:</HD> The Securities and Exchange Commission (“Commission”) is publishing this concept release to solicit comments on whether to amend the asset-level disclosure requirements for residential mortgage-backed securities in Item 1125 of Regulation AB and whether to revise generally the definition of “asset-backed security” and/or other definitions in Item 1101 of Regulation AB. The Commission is considering these steps to expand issuer and investor access to the registered asset-backed securities markets and facilitate enhanced capital formation and liquidity while maintaining appropriate investor protections. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> Comments should be received on or before December 1, 2025. </EFFDATE> <HD SOURCE="HED">ADDRESSES:</HD> Comments may be submitted by any of the following methods: <HD SOURCE="HD2">Electronic Comments</HD> • Use the Commission's internet comment form ( <E T="03">https://www.sec.gov/comments/s7-2025-04/s7-2025-04</E> ); or • Send an email to <E T="03">rule-comments@sec.gov.</E> Please include File Number S7-2025-04 on the subject line. <HD SOURCE="HD2">Paper Comments</HD> • Send paper comments to Vanessa A. Countryman, Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090. <FP> All submissions should refer to File Number S7-2025-04. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method of submission. The Commission will post all comments on the Commission's website ( <E T="03">https://www.sec.gov/comments/s7-2025-04/s7-2025-04</E> ). Do not include personally identifiable information in submissions; you should submit only information that you wish to make available publicly. The Commission may redact in part or withhold entirely from publication submitted material that is obscene or subject to copyright protection. </FP> <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> Arthur Sandel, Special Counsel, or Kayla Roberts, Acting Chief, in the Office of Structured Finance, Division of Corporation Finance, at (202) 551-3850, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549. <HD SOURCE="HD1">Table of Contents</HD> <EXTRACT> <FP SOURCE="FP-2">I. Introduction</FP> <FP SOURCE="FP-2">II. Asset-Level Disclosures for Residential Mortgage-Backed Securities</FP> <FP SOURCE="FP1-2">A. Background</FP> <FP SOURCE="FP1-2">B. Recent Developments</FP> <FP SOURCE="FP1-2">C. Potential Changes to RMBS Asset-Level Disclosure Requirements</FP> <FP SOURCE="FP1-2">D. Request for Comment</FP> <FP SOURCE="FP-2">III. Disclosure of Certain Sensitive RMBS Asset-Level Data</FP> <FP SOURCE="FP1-2">A. Background</FP> <FP SOURCE="FP1-2">B. Potential Regulatory Response</FP> <FP SOURCE="FP1-2">C. Request for Comment</FP> <FP SOURCE="FP-2">IV. Definition of Asset-Backed Security Generally</FP> <FP SOURCE="FP1-2">A. Background</FP> <FP SOURCE="FP1-2"> B. Potential Changes to Regulation AB Definitions </FP> <FP SOURCE="FP1-2">C. Request for Comment</FP> <FP SOURCE="FP-2">V. General Request for Comment</FP> <FP SOURCE="FP-2">VI. Regulatory Planning and Review</FP> <FP SOURCE="FP-2">VII. Conclusion</FP> </EXTRACT> <HD SOURCE="HD1">I. Introduction</HD> Securitization serves a vital role in the U.S. capital markets and the U.S. economy. As a method of financing in which financial assets are pooled and converted into instruments that may be offered and sold in the capital markets, securitization helps provide entities, such as banks, operating companies, and other non-depository financial institutions, with access to lower-cost capital to make loans to borrowers or otherwise finance operations. <SU>1</SU> <FTREF/> This process, in turn, promotes necessary market liquidity and facilitates capital formation in critical economic sectors, such as housing and consumer lending. For investors, asset-backed securities (“ABS”) may offer attractive yields and an opportunity to diversify fixed-income portfolios with a range of credit quality. A more liquid registered ABS market should further increase opportunities for capital formation while also reducing borrowing costs for assets routinely financed by U.S. households, corporations, and small businesses, such as automobiles and residential and commercial real estate. <FTNT> <SU>1</SU>   <E T="03">See, e.g.,</E> Steven L. Schwarcz, <E T="03">Securitization Ten Years after the Financial Crisis: An Overview,</E> 37 Rev. of Banking and Fin. L. 757, 759 (2018), <E T="03">available at https://www.bu.edu/rbfl/files/2018/12/Schwarcz-757.pdf</E> (“Because financial assets can be easier to understand and value, if not safer, than the business and risks associated with operating a company, securitization offers companies an efficient and usually lower-cost funding source.”). <E T="03">See also,</E> Aron M. Zuckerman, <E T="03">Securitization Reform: A Coasean Cost Analysis,</E> 1 Harv. Bus. L. Rev. 303, 306 (2011), <E T="03">available at https://journals.law.harvard.edu/hblr//wp-content/uploads/sites/87/2014/09/Zuckerman-Securitization_Reform.pdf</E> (“The chief benefit for banks from securitization is lower funding costs for making residential housing loans.”). </FTNT> From its origins in the earliest mortgage-backed securities transactions of the 1970s, the modern ABS market gained traction in the 1980s and 1990s and, since then, the Commission has adopted a series of disclosure rules and forms to establish comprehensive registration and ongoing reporting requirements. In 2004, the Commission adopted Regulation AB, <SU>2</SU> <FTREF/> establishing for the first time a comprehensive registration, disclosure, and ongoing reporting regime for ABS under the Securities Act of 1933  <SU>3</SU> <FTREF/> (the “Securities Act”) and the Securities Exchange Act of 1934  <SU>4</SU> <FTREF/> (the “Exchange Act”). <SU>5</SU> <FTREF/> As we discuss in more detail in section IV.A below, the availability of this tailored regime was intentionally limited only to the types of securitizations that meet the definition of ABS in Item 1101(c) of Regulation AB. <SU>6</SU> <FTREF/> <FTNT> <SU>2</SU>  17 CFR 229.1100 <E T="03">et seq.</E> </FTNT> <FTNT> <SU>3</SU>  15 U.S.C. 77a <E T="03">et seq.</E> </FTNT> <FTNT> <SU>4</SU>  15 U.S.C. 78a <E T="03">et seq.</E> </FTNT> <FTNT> <SU>5</SU>   <E T="03">Asset-Backed Securities,</E> Release No. 33-8518 (Dec. 22, 2004) [70 FR 1506] (Jan. 7, 2005) (“2004 Regulation AB Adopting Release”). </FTNT> <FTNT> <SU>6</SU>  17 CFR 229.1101(c). <E T="03">See</E> section III.A.2 of the 2004 Regulation AB Adopting Release. </FTNT> Following the financial crisis of 2007-2009 (the “Financial Crisis”), Congress enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”). <SU>7</SU> <FTREF/> The Dodd-Frank Act added a new statutory definition of “asset-backed security”  <SU>8</SU> <FTREF/> and included mandates for the Commission to adopt rules and regulations intended to address concerns in the securitization market including, in relevant part, a lack of transparency about the assets underlying ABS. <SU>9</SU> <FTREF/> In 2014, the Commission adopted significant revisions to its registration, disclosure, and reporting regime for ABS, including amendments to Regulation AB (colloquially, “Regulation AB II”), in part to implement several of these Dodd-Frank Act mandates. <SU>10</SU> <FTREF/> As discussed in sections II and III below, one such amendment adopted by the Commission in Regulation AB II was the new requirement that ABS issuers disclose asset-level data for all assets underlying registered residential mortgage-backed securities (“RMBS”) and certain other asset classes. <SU>11</SU> <FTREF/> <FTNT> <SU>7</SU>  Public Law 111-203, 124 Stat. 1376 (2010). </FTNT> <FTNT> <SU>8</SU>  Section 3(a)(79) of the Exchange Act [15 U.S.C. 78c(a)(79)]. <E T="03">See</E> section IV.A below for a more detailed discussion about the commonalities and distinctions between the definitions in Regulation AB and the Exchange Act. </FTNT> <FTNT> <SU>9</SU>   <E T="03">See, e.g.,</E> Public Law 111-203, 942(b), 124 Stat. 1376, 1897. </FTNT> <FTNT> <SU>10</SU>   <E T="03">Asset-Backed Securities Disclosure and Registration,</E> Release No. 33-9638 (Sept. 4, 2014) [79 FR 57184] (Sept. 24, 2014) (“2014 Regulation AB II Adopting Release”). </FTNT> <FTNT> <SU>11</SU>   <E T="03">See</E> section III.A of the 2014 Regulation AB II Adopting Release and the Appendix to Schedule AL (Item 1125 of Regulation AB) [17 CFR 229.1125]. The asset-level requirements adopted by the Commission partially implemented the statutory mandate in Securities Act section 7(c), as added by section 942(b) of the Dodd-Frank Act, which requires, in relevant part, that the Commission adopt regulations requiring an issuer of an ABS to disclose, for each tranche or class of security, information about the underlying assets, including asset-level data, if such data is necessary for investors to independently perform due diligence. </FTNT> In developing these specialized registration and reporting requirements, the Commission and its staff have regularly engaged ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 107k characters. Full document text is stored and available for version comparison. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━