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Federal Register / Vol. 86, No. 241 / Monday, December 20, 2021 / Rules and Regulations review of the definition of qualified residential mortgage, the communityfocused residential mortgage exemption, and the exemption for qualifying threeto-four unit residential mortgage loans, in each case as currently set forth in the Credit Risk Retention Regulations as defined below as adopted by the agencies. After completing the review, the agencies have determined not to propose any change at this time to the definition of qualified residential mortgage, the community-focused residential mortgage exemption, or the exemption for qualifying three-to-four unit residential mortgage loans.
DATES: December 20, 2021.
FOR FURTHER INFORMATION CONTACT:
OCC: Kevin Korzeniewski, Counsel, Chief Counsels Office, 202 6495490;
Maria Gloria Cobas, 202 6495495, Senior Financial Economist, Office of the Comptroller of the Currency, 400 7th Street SW, Washington, DC 20219.
Board: Flora H. Ahn, Special Counsel, 202 4522317, David W. Alexander, Senior Counsel, 202 452287, or Matthew D. Suntag, Senior Counsel, 202 4523694, Legal Division; Sean Healey, Lead Financial Institution Policy Analyst, 202 9124611, Division of Supervision and Regulation;
Karen Pence, Deputy Associate Director, Division of Research & Statistics, 202
4522342; Nikita Pastor, Senior Counsel, Division of Consumer &
Community Affairs 202 4523692;
Board of Governors of the Federal Reserve System, 20th and C Streets NW, Washington, DC 20551.
FDIC: Rae-Ann Miller, Senior Deputy Director, 202 8983898; Kathleen M.
Russo, Counsel, 703 5622071, krusso@fdic.gov; Phillip E. Sloan, Counsel, 202 8988517, psloan@
fdic.gov, Federal Deposit Insurance Corporation, 550 17th Street NW, Washington, DC 20429.
Commission: Arthur Sandel, Special Counsel, 202 5513850, in the Office of Structured Finance, Division of Corporation Finance; or Chandler Lutz, Economist, 202 5516600, in the Office of Risk Analysis, Division of Economic and Risk Analysis, U.S.
Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549.
FHFA: Ron Sugarman, Principal Policy Analyst, Office of Capital Policy, 202 6493208, Ron.Sugarman@
fhfa.gov, or Peggy K. Balsawer, Associate General Counsel, Office of General Counsel, 202 6493060, Peggy.Balsawer@fhfa.gov, Federal Housing Finance Agency, Constitution Center, 400 7th Street SW, Washington, DC 20219. For TTY/TRS users with hearing and speech disabilities, dial 711

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and ask to be connected to any of the contact numbers above.
HUD: Kurt G. Usowski, Deputy Assistant Secretary for Economic Affairs, U.S. Department of Housing &
Urban Development, 451 7th Street SW, Washington, DC 20410; telephone number 2024025899 this is not a tollfree number. Persons with hearing or speech impairments may access this number through TTY by calling the tollfree Federal Relay at 8008778339.
SUPPLEMENTARY INFORMATION: The Credit Risk Retention Regulations are codified at 12 CFR part 43; 12 CFR part 244; 12
CFR part 373; 17 CFR part 246; 12 CFR
part 1234; and 24 CFR part 267 the Credit Risk Retention Regulations. The Credit Risk Retention Regulations require the OCC, Board, FDIC and Commission, in consultation with the FHFA and HUD, to commence a review of the following provisions of the Credit Risk Retention Regulations no later than December 24, 2019: 1 The definition of qualified residential mortgage QRM in section _.13 of the Credit Risk Retention Regulations; 2 the community-focused residential mortgage exemption in section _.19f of the Credit Risk Retention Regulations; and 3 the exemption for qualifying three-to-four unit residential mortgage loans in section _.19g of the Credit Risk Retention Regulations collectively, the subject residential mortgage provisions.
Notification announcing the commencement of the review was published in the Federal Register on December 20, 2019 84 FR 70073.
Notification announcing the agencies decision to extend to June 20, 2021, the period for completion of the review and publication of notification disclosing determination of the review was published in the Federal Register on June 30, 2020 85 FR 39099. On July 22, 2021, the agencies published another notification in the Federal Register, announcing their decision to extend the period to complete the review further to December 20, 2021 86 FR 38607.
The agencies have completed their review of the subject residential mortgage provisions and this notification discloses the agencies determination as a result of the review.
Overview Section 15G of the Securities Exchange Act, as added by section 941b of the Dodd-Frank Wall Street Reform and Consumer Protection Act Dodd-Frank Act, required the Board, FDIC, OCC collectively, the Federal banking agencies and the Commission, together with, in the case of the securitization of any residential mortgage asset, HUD and FHFA, to
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jointly prescribe regulations that i require a securitizer to retain not less than five percent of the credit risk of any asset that the securitizer, through the issuance of an asset-backed security ABS, transfers, sells, or conveys to a third party, and ii prohibit a securitizer from directly or indirectly hedging or otherwise transferring the credit risk that the securitizer is required to retain under section 15G and the agencies implementing rules.1
Section 941 of the Dodd-Frank Act also provides that a securitizer shall not be required to retain any part of the credit risk for an asset that is transferred, sold, or conveyed through the issuance of ABS interests by the securitizer, if all of the assets that collateralize the ABS
interests are QRMs, as that term is jointly defined by the agencies. Section 941 provides that the definition of QRM
can be no broader than the definition of a qualified mortgage QM as that term is defined under section 129C of the Truth in Lending Act TILA,2 as amended by the Dodd-Frank Act, and regulations adopted thereunder.3 The agencies decided to align the definition of QRM with the definition of QM.4 The Credit Risk Retention Regulations define QRM to mean a QM, as defined under section 129C of TILA and Regulation Z
issued thereunder at 12 CFR part 1026, as amended from time to time.
As part of the Credit Risk Retention Regulations, the agencies are required to review the definition of QRM
periodically to assess developments in the residential mortgage market, including the results of the statutorily required five-year review by the Consumer Financial Protection Bureau CFPB of the ability-to-repay rules and the QM definition. In conducting the review the commencement of which was announced on December 20, 2019
and reaching their conclusions, the agencies considered what has been learned since 2014 about whether the loan and borrower characteristics specified in the QRM definition are predictive of a lower risk of default and also assessed how mortgage credit access conditions have changed since 2014, using data from the date on which the Credit Risk Retention Regulations were announced, October 22, 2014, through December 31, 2019 the review period. Among other things, the agencies analyzed Fannie Mae and Freddie Mac the Enterprises and nonEnterprise loan-level mortgage 1 See 15 U.S.C. 78o11b, c1A and c1Bi.
2 15 U.S.C. 1639c.
3 See 15 U.S.C. 78o11 e4C.
4 See 79 FR 77740 Dec. 24, 2014.

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