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SEC issues proposed rules on reps and warranties in ABS offerings.

The Securities and Exchange Commission (SEC) proposed rules in October pursuant to Section 943 of the Dodd-Frank Wall Street Reform and Consumer Protection Act related to representations and warranties in asset-backed securities offerings.

The proposals would require securitizers of ABS, including commercial mortgage-backed securities, to disclose fulfilled and unfulfilled repurchase requests across all transactions.

The proposed rules would require nationally recognized statistical rating organizations (NRSROs) to include information regarding the representations, warranties and enforcement mechanisms available to investors in an ABS offering in any report that accompanied a credit rating issued in connection with an offering, including a preliminary credit rating.

SEC's proposed rules would require that the NRSRO include a description of how the representations, warranties and enforcement mechanisms differ from those in issuances of similar securities.

The disclosure requirements would apply to offerings of ABS registered under the Securities Act or ABS offered and sold without registration in reliance upon Securities Act rules, which would include offerings eligible for Rule 144A resales and other offerings conducted that relied on exemptions from registration.

The SEC also proposed that issuers disclose repurchase demand and repurchase and replacement activity concerning the asset pool on an ongoing basis in periodic reports.

Comments on the SEC proposals are due on or before Nov. 15. The Mortgage Bankers Association will submit comments within the proposed time frame. MBA commented extensively on proposed rules released by the SEC in April that would revise the disclosure, reporting and offering process for ABS.

Michael Murray is editorial manager of MBA Commercial/Multifamily Newslink. To subscribe, visit Contributors: Joel Kan is director of research and business development for the Mortgage Bankers Association (MBA).
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Title Annotation:Commercial; Securities and Exchange Commission; asset-backed securities
Comment:SEC issues proposed rules on reps and warranties in ABS offerings.(Commercial)(Securities and Exchange Commission)(asset-backed securities)
Author:Murray, Michael
Publication:Mortgage Banking
Article Type:Brief article
Geographic Code:1USA
Date:Nov 1, 2010
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