The Securities and Exchange Commission (SEC) has issued a concept release, actively seeking public input on how to enhance its current rules governing residential mortgage-backed securities (RMBS) and certain aspects of asset-backed securities (ABS) generally.
This initiative addresses a critical concern: the complete absence of public RMBS offerings since 2013. Despite this stagnation, RMBS are recognized as a vital component of a healthy mortgage market, providing access to a wider range of issuers and investors. This diversification helps reduce reliance on any single source of liquidity and ultimately contributes to lower consumer costs.
The concept release specifically invites feedback on whether existing SEC regulations inadvertently act as impediments to public RMBS offerings. Key areas of inquiry include the necessity of revising certain disclosure requirements and navigating the complexities of sharing sensitive mortgage loan information with investors while diligently protecting privacy and confidentiality. Furthermore, the Commission is exploring whether adjustments to regulatory definitions are warranted and if other ABS regulations should be modified to facilitate broader access to the public market.
Underscoring the importance of this endeavor, SEC Chairman Paul S. Atkins remarked, “Home ownership has long been the cornerstone of the American Dream. Yet, this dream remains out of reach for too many Americans today due, in part, to mortgage costs. A vibrant public market for RMBS can have downstream effects of reducing these costs and benefitting the U.S. housing sector.” He further emphasized the Commission's commitment, stating, “It is important for the Commission to hear from market participants on steps it can take to revive the public RMBS market.”
Concept releases serve as a crucial mechanism for the Commission to gather public perspectives before making decisions on potential rulemaking. These documents typically outline a particular area of concern, identify various potential approaches, and pose a series of questions for public deliberation.
In this instance, the Commission encourages comprehensive commentary on any associated costs, burdens, or benefits that might arise from possible regulatory responses related to the RMBS and ABS items identified in the release, or from alternative solutions proposed by commenters. The public is specifically invited to weigh in on whether particular strategies, alternative methods, or a combination thereof would effectively address the identified issues.
The period for public comment will remain open for 60 days following the publication of the comment request in the Federal Register.