[Federal Register: October 13, 2010 (Volume 75, Number 197)]
[Proposed Rules]
[Page 62718-62737]
[DOCID:fr13oc10-15]

=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

17 CFR Parts 229, 240, and 249

[Release Nos. 33-9148; 34-63029; File No. S7-24-10]
RIN 3235-AK75

Disclosure for Asset-Backed Securities Required by Section 943 of
the Dodd-Frank Wall Street Reform and Consumer Protection Act

AGENCY: Securities and Exchange Commission.

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: Pursuant to Section 943 of the Dodd-Frank Wall Street Reform
and Consumer Protection Act \1\ we are proposing rules related to
representations and warranties in asset-backed securities offerings.
Our proposals would require securitizers of asset-backed securities to
disclose fulfilled and unfulfilled repurchase requests across all
transactions. Our proposals would also require nationally recognized
statistical rating organizations to include information regarding the
representations, warranties and enforcement mechanisms available to
investors in an asset-backed securities offering in any report
accompanying a credit rating issued in connection with such offerings,
including a preliminary credit rating.
---------------------------------------------------------------------------

    \1\ Public Law 111-203 (July 21, 2010).

---------------------------------------------------------------------------
DATES: Comments should be received on or before November 15, 2010.

ADDRESSES: Comments may be submitted by any of the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://
www.sec.gov/rules/proposed.shtml);
     Send an e-mail to<EMAIL_ADDRESS>Please include
File Number S7-24-10 on the subject line; or
     Use the Federal Rulemaking Portal (http://
www.regulations.gov). Follow the instructions for submitting comments.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.

All submissions should refer to File Number S7-24-10. This file number
should be included on the subject line if e-mail is used. To help us
process and review your comments more efficiently, please use only one
method. The Commission will post all comments on the Commission's
Internet Web site (http://www.sec.gov/rules/proposed.shtml). Comments
are also available for Web site viewing and printing in the
Commission's Public Reference Room, 100 F Street, NE., Washington, DC
20549, on official business days between the hours of 10 a.m. and 3
p.m. All comments received will be posted without change; we do not
edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly.

FOR FURTHER INFORMATION CONTACT: Rolaine Bancroft, Attorney-Advisor, in
the Office of Rulemaking, at<PHONE_NUMBER>, Division of Corporation
Finance, U.S. Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-3628 or, with respect to proposed Rule 17g-7,
Joseph I. Levinson, Special Counsel, at<PHONE_NUMBER>; Division of
Trading and Markets, U.S. Securities and Exchange Commission, 100 F
Street, NE., Washington, DC 20549-3628.

SUPPLEMENTARY INFORMATION: We are proposing amendments to Items 1104
and 1121 \2\ of Regulation AB \3\ (a subpart

of Regulation S-K) under the Securities Act of 1933 (``Securities
Act'').\4\ We also are proposing to add Rules 15Ga-1 \5\ and 17g-7 \6\
and Form ABS-15G \7\ under the Securities Exchange Act of 1934
(``Exchange Act'').\8\
---------------------------------------------------------------------------

    \2\ 17 CFR 229.1104 and 17 CFR 229.1121.
    \3\ 17 CFR 229.1100 through 17 CFR 229.1123.
    \4\ 15 U.S.C. 77a et seq.
    \5\ 17 CFR 240.15Ga-1.
    \6\ 17 CFR 240.17g-7.
    \7\ 17 CFR 249.1300.
    \8\ 15 U.S.C. 78a et seq.
---------------------------------------------------------------------------

Table of Contents

I. Background
II. Discussion of Proposals
    A. Proposed Disclosure Requirements for Securitizers
    1. Definition of Exchange-Act ABS for Purposes of Rule 15Ga-1
    2. Definition of Securitizer for Purposes of Rule 15Ga-1
    3. Disclosures Required by Proposed Rule 15Ga-1
    4. Proposed Form ABS-15G
    5. Offshore Sales of Exchange Act-ABS
    B. Proposed Disclosure Requirements in Regulation AB
Transactions
    C. Proposed Disclosure Requirements for NRSROs
III. Transition Period
IV. General Request for Comments
V. Paperwork Reduction Act
    A. Background
    B. PRA Reporting and Cost Burden Estimates
    1. Form ABS-15G
    2. Rule 15Ga-1
    3. Forms S-1 and S-3
    4. Form 10-D
    5. Regulation S-K
    6. Rule 17g-7
    7. Summary of Proposed Changes to Annual Burden Compliance in
Collection of Information
    8. Solicitation of Comments
VI. Benefit-Cost Analysis
    A. Benefits
    B. Costs
    C. Request for Comment
VII. Consideration of Burden on Competition and Promotion of
Efficiency, Competition and Capital Formation
VIII. Small Business Regulatory Enforcement Fairness Act
IX. Regulatory Flexibility Act Certification
X. Statutory Authority and Text of Proposed Rule and Form Amendments

I. Background

    This release is one of several that the Commission is required to
issue to implement provisions of the Dodd-Frank Wall Street Reform and
Consumer Protection Act (the ``Act'') related to asset-backed
securities (``ABS''). In this release, we propose rules to implement
Section 943 of the Act, which requires the Commission to prescribe
regulations on the use of representations and warranties in the market
for asset-backed securities:
    (1) To require any securitizer to disclose fulfilled and
unfulfilled repurchase requests across all trusts aggregated by
securitizer, so that investors may identify asset originators with
clear underwriting deficiencies; and
    (2) To require each nationally recognized statistical rating
organization (``NRSRO'') to include, in any report accompanying a
credit rating for an asset-backed securities offering, a description of
(A) the representations, warranties and enforcement mechanisms
available to investors; and (B) how they differ from the
representations, warranties and enforcement mechanisms in issuances of
similar securities.\9\
---------------------------------------------------------------------------

    \9\ See Section 943 of the Act.
---------------------------------------------------------------------------

    The Act requires us to adopt these rules within 180 days of
enactment of the Act.
    In April of 2010, we proposed rules that would revise the
disclosure, reporting and offering process for asset-backed securities
(the ``2010 ABS Proposing Release'').\10\ Among other things, the 2010
ABS Proposing Release proposed new disclosure requirements with respect
to repurchase requests. Specifically, we proposed that issuers disclose
in prospectuses the repurchase demand and repurchase and replacement
activity for the last three years of sponsors of asset-backed
transactions or originators of underlying pool assets if they are
obligated to repurchase assets pursuant to the transaction
agreements.\11\ These 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
includes both offerings eligible for Rule 144A resales and other
offerings conducted in reliance on exemptions from registration. We
also proposed that issuers disclose the repurchase demand and
repurchase and replacement activity concerning the asset pool on an
ongoing basis in periodic reports.\12\ As described in Section II.B.
below, we are re-proposing the disclosure requirements with respect to
repurchase requests in Regulation AB in order to conform the
disclosures to those required by Section 943 of the Act.
---------------------------------------------------------------------------

    \10\ See Asset Backed Securities, SEC Release No. 33-9117 (April
7, 2010) [75 FR 23328] (the ``2010 ABS Proposing Release'').
    \11\ Depending on the transaction, the originator of the assets
or, most typically, the sponsor of the securities--who could also
function as the originator--would be the obligated party. See
previously proposed Items 1104(f) and 1110(c) of Regulation AB in
the 2010 ABS Proposing Release.
    \12\ See previously proposed Item 1121(c) of Regulation AB in
the 2010 ABS Proposing Release.
---------------------------------------------------------------------------

    In the underlying transaction agreements for an asset
securitization, sponsors or originators typically make representations
and warranties relating to the pool assets and their origination,
including about the quality of the pool assets. For instance, in the
case of residential mortgage-backed securities, one typical
representation and warranty is that each of the loans has complied with
applicable federal, state and local laws, including truth-in-lending,
consumer credit protection, predatory and abusive laws and disclosure
laws. Another representation that may be included is that no fraud has
taken place in connection with the origination of the assets on the
part of the originator or any party involved in the origination of the
assets. Upon discovery that a pool asset does not comply with the
representation or warranty, under transaction covenants, an obligated
party, typically the sponsor, must repurchase the asset or substitute a
different asset that complies with the representations and warranties
for the non-compliant asset. The effectiveness of the contractual
provisions related to representations and warranties has been
questioned and lack of responsiveness by sponsors to potential breaches
of the representations and warranties relating to the pool assets has
been the subject of investor complaint.\13\
---------------------------------------------------------------------------

    \13\ As we noted in the 2010 ABS Proposing Release, transaction
agreements typically have not included specific mechanisms to
identify breaches of representations and warranties or to resolve a
question as to whether a breach of the representations and
warranties has occurred. Thus, these contractual agreements have
frequently been ineffective because, without access to documents
relating to each pool asset, it can be difficult for the trustee,
which typically notifies the sponsor of an alleged breach, to
determine whether or not a representation or warranty relating to a
pool asset has been breached. In the 2010 ABS Proposing Release, the
Commission proposed a condition to shelf eligibility that would
require a provision in the pooling and servicing agreement that
would require the party obligated to repurchase the assets for
breach of representations and warranties to periodically furnish an
opinion of an independent third party regarding whether the
obligated party acted consistently with the terms of the pooling and
servicing agreement with respect to any loans that the trustee put
back to the obligated party for violation of representations and
warranties and which were not repurchased. See Section II.A.3.b. of
the 2010 ABS Proposing Release. See also the Committee on Capital
Markets Regulation, The Global Financial Crisis: A Plan for
Regulatory Reform, May 2009, at 135 (noting that contractual
provisions have proven to be of little practical value to investors
during the crisis); see also Investors Proceeding with Countrywide
Lawsuit, Mortgage Servicing News, Feb. 1, 2009 (describing class
action investor suit against Countrywide in which investors claim
that language in the pooling and servicing agreements requires the
seller/servicer to repurchase loans that were originated with
``predatory'' or abusive lending practices) and American
Securitization Forum, ASF Releases Model Representations and
Warranties to Bolster Risk Retention and Transparency in Mortgage
Securitizations, (Dec. 15, 2009), available at http://
www.americansecuritization.com. It has been reported that only large
ABS investors, such as Fannie Mae and Freddie Mac, have been able to
effectively exercise repurchase demands. See Aparajita Saha-Bubna,
``Repurchased Loans Putting Banks in Hole,'' Wall Street Journal
(Mar. 8, 2010) (noting that most mortgages put back to lenders are
coming from Fannie Mae and Freddie Mac).

---------------------------------------------------------------------------

II. Discussion of Proposals

A. Proposed Disclosure Requirements for Securitizers

    We are proposing to add new Rule 15Ga-1 to implement Section 943(2)
of the Act. This proposed rule would require any securitizer of asset-
backed securities to disclose fulfilled and unfulfilled repurchase
requests across all trusts aggregated by securitizer, so that investors
may identify asset originators with clear underwriting deficiencies.
Under our proposals, a securitizer would provide the disclosure by
filing new proposed Form ABS-15G.
1. Definition of Exchange Act-ABS for Purposes of Rule 15Ga-1
    The Act amended the Exchange Act to include a definition of an
``asset-backed security'' and Section 943 of the Act references that
definition.\14\ The statutory definition of an asset-backed security
(``Exchange Act-ABS'') is much broader than the definition of an asset-
backed security in Regulation AB (``Reg AB-ABS'').\15\ The definition
of an Exchange Act-ABS includes securities that are typically sold in
transactions that are exempt from registration under the Securities
Act, such as collateralized debt obligations (``CDOs''), as well as
securities issued or guaranteed by a government sponsored entity, such
as Fannie Mae and Freddie Mac.\16\ Similarly, if a municipal entity
issues securities collateralized by a self-liquidating pool of loans
that allow holders of the securities to receive payments that depend
primarily on cash flow from those loans, that security would fall
within the definition of an Exchange Act-ABS.\17\ Since Section 943
uses the broader Exchange Act-ABS definition, our proposed Rule 15Ga-1
would require a securitizer to provide disclosures relating to all
asset-backed securities that fall within the statutory definition,
whether or not sold in Securities Act registered transactions. However,
as we discuss further below, even if a security meets the definition of
an Exchange Act-ABS, the new disclosure requirement would not be
triggered if the underlying transaction agreements do not contain a
covenant to repurchase or replace an asset.
---------------------------------------------------------------------------

    \14\ Section 3(a)(77) of the Exchange Act provides that the term
``asset backed security'' means a fixed-income or other security
collateralized by any type of self-liquidating financial asset
(including a loan, a lease, a mortgage, or a secured or unsecured
receivable) that allows the holder of the security to receive
payments that depend primarily on cash flow from the asset,
including a collateralized mortgage obligation; a collateralized
debt obligation; a collateralized bond obligation; a collateralized
debt obligation of asset-backed securities; a collateralized debt
obligation of collateralized debt obligations; and a security that
the Commission, by rule, determines to be an asset-backed security
for purposes of this section; and does not include a security issued
by a finance subsidiary held by the parent company or a company
controlled by the parent company, if none of the securities issued
by the finance subsidiary are held by an entity that is not
controlled by the parent company. Section 3(a)(77) of the Exchange
Act, as amended by the Act.
    \15\ In 2004, we adopted the definition of ``asset-backed
security'' in Regulation AB. The definition and our interpretations
of it are intended to establish parameters for the types of
securities that are appropriate for the alternate disclosure and
regulatory regime provided in Regulation AB and the related rules
for Form S-3 registration of ABS. The definition does not mean that
public offerings of securities outside of these parameters, such as
synthetic securitizations, may not be registered with the
Commission, but only that the alternate regulatory regime is not
designed for those securities. The definition does mean that such
securities must rely on non-ABS form eligibility for registration,
including shelf registration. See Section III.A.2 of Asset-Backed
Securities, SEC Release 33-8518 (January 7, 2005) [70 FR 1506] (the
``2004 ABS Adopting Release'') and Item 1101(c) of Regulation AB [17
CFR 1101(c)].
    \16\ Government sponsored enterprises (GSEs) such as Fannie Mae
and Freddie Mac purchase mortgage loans and issue or guarantee
mortgage-backed securities (MBS). MBS issued or guaranteed by these
GSEs have been and continue to be exempt from registration under the
Securities Act and reporting under the Exchange Act. For more
information regarding GSEs, see Task Force on Mortgage-Backed
Securities Disclosure, ``Staff Report: Enhancing Disclosure in the
Mortgage-Backed Securities Markets'' (Jan. 2003) available at http:/
/www.sec.gov/news/studies/mortgagebacked.htm.
    \17\ For a discussion of municipal ABS, see generally Robert A.
Fippinger, The Securities Law of Public Finance vol. 1, Sec.
1:6.2[B], 1-70--1-72 (2d ed., Practicing Law Institute 2009).
---------------------------------------------------------------------------

    Request for Comment:
    1. Is it clear what types of securities a securitizer would have to
provide representation and warranty repurchase disclosure about under
proposed Rule 15Ga-1? If not, please identify which securities are not
clearly covered and the reasons why those securities are not clearly
included or excluded by the proposal.
    2. Should we provide further guidance regarding the application of
proposed Rule 15Ga-1 to securities issued by municipal entities that
would fall within the definition of Exchange Act-ABS? Is it clear what
types of municipal securities a municipal securitizer would have to
provide representation and warranty repurchase disclosure about under
proposed Rule 15Ga-1? If not, please identify those types of municipal
securities that are not clearly covered and explain why they are not
clearly included or excluded by the proposal.
2. Definition of Securitizer for Purposes of Rule 15Ga-1
    Section 943 and proposed Rule 15Ga-1 impose the disclosure
obligation on a ``securitizer'' as defined in the Exchange Act. The Act
amended the Exchange Act to include the definition of a
``securitizer.'' Under the Exchange Act, a securitizer is either:
    (A) An issuer of an asset-backed security; or
    (B) A person who organizes and initiates an asset-backed securities
transaction by selling or transferring assets, either directly or
indirectly, including through an affiliate, to the issuer.\18\
---------------------------------------------------------------------------

    \18\ See Section 15G(a)(3) of the Exchange Act, as amended by
the Act.
---------------------------------------------------------------------------

    The definition of securitizer is not specifically limited to
entities that undertake transactions that are registered under the
Securities Act or conducted in reliance upon any particular exemption.
Consequently, we believe it is intended to apply to any entity or
person that issues or organizes an Exchange Act-ABS as specified in
Section 15G(a)(3) of the Exchange Act. As a result, proposed Rule 15Ga-
1 would require any entity coming within the Section 15G(a)(3)
definition of securitizer, including government sponsored entities such
as Fannie Mae, Freddie Mac, or a municipal entity, to provide the
proposed disclosures. Further, as noted above, Section 943 and Section
15G(a)(3) do not distinguish between securitizers of Exchange Act-ABS
in registered or unregistered transactions, and our proposed Rule 15Ga-
1 would apply equally to registered and unregistered transactions.
    With respect to registered transactions and the definitions of
transaction parties in Regulation AB, sponsors and depositors \19\ both
fall within the statutory definition of securitizer. A sponsor
typically initiates a securitization transaction by selling or pledging
to a specially created issuing entity a group of financial assets that
the sponsor either has originated itself or has purchased in the
secondary market.\20\ In some instances, the transfer

of assets is a two-step process: the financial assets are transferred
by the sponsor first to an intermediate entity, often a limited purpose
entity created by the sponsor for a securitization program and commonly
called a depositor, and then the depositor will transfer the assets to
the issuing entity for the particular asset-backed transaction.\21\
Because both sponsors and depositors fit within the statutory
definition of securitizers, both entities would have the disclosure
responsibilities under proposed Rule 15Ga-1. However, if a sponsor
filed all disclosures proposed to be required under Rule 15Ga-1, which
would include disclosures of the activity of affiliated depositors,
Rule 15Ga-1 would provide that those affiliated depositors would not
have to separately provide and file the same disclosures. Such
disclosure would be duplicative and would not provide any additional
useful information, since as noted above, the depositor usually serves
as an intermediate entity of a transaction initiated by a sponsor.\22\
---------------------------------------------------------------------------

    \19\ Securities Act Rule 191 [17 CFR 230.191] generally defines
an issuer as the depositor.
    \20\ A sponsor, as defined in Regulation AB, is the person who
organizes and initiates an asset-backed securities transaction by
selling or transferring assets, either directly or indirectly,
including through an affiliate, to the issuing entity. See Item
1101(l) of Regulation AB [17 CFR 229.1101(l)]. Sponsors of asset-
backed securities often include banks, mortgage companies, finance
companies, investment banks and other entities that originate or
acquire and package financial assets for resale as ABS. See Section
II. of the 2004 ABS Adopting Release.
    \21\ A depositor receives or purchases and transfers or sells
the pool assets to the issuing entity. See Item 1101(e) of
Regulation AB [17 CFR 229.1101(e)]. For asset-backed securities
transactions where there is not an intermediate transfer of assets
from the sponsor to the issuing entity, the term depositor refers to
the sponsor. For asset-backed securities transactions where the
person transferring or selling the pool assets is itself a trust,
the depositor of the issuing entity is the depositor of that trust.
    \22\ There may be other situations where multiple affiliated
securitizers would have individual reporting obligations under
proposed Rule 15Ga-1 with respect to a particular transaction.
Therefore, we propose that if one securitizer has filed all the
disclosures required in order to meet the obligations under Rule
15Ga-1, which would include disclosures of the activity of
affiliated securitizers, those affiliated securitizers would not be
required to separately provide and file the same disclosures.
---------------------------------------------------------------------------

    Request for Comment:
    3. Is it clear which entities or persons would have disclosure
responsibilities under proposed Rule 15Ga-1? If not, please identify
those possible entities or persons, describe their role in the
transaction, and explain why they are not clearly included or excluded
by the definition of a securitizer.
    4. Should we provide further guidance regarding the application of
proposed Rule 15Ga-1 to municipal issuers that are within the
definition of securitizers? Is it clear which municipal entities would
have disclosure responsibilities under proposed Rule 15Ga-1? If not,
please identify those municipal entities that are not clearly covered
and explain why they are not clearly included or excluded by the
proposal.
3. Disclosures Required by Proposed Rule 15Ga-1
    In accordance with Section 943 of the Act, we are proposing new
Rule 15Ga-1 \23\ to require any securitizer of an Exchange Act-ABS to
disclose fulfilled and unfulfilled repurchase requests across all
trusts aggregated by securitizer, so that investors may identify asset
originators with clear underwriting deficiencies. We are proposing
that, if the underlying transaction agreements provide a covenant to
repurchase or replace an underlying asset for breach of a
representation or warranty, then a securitizer would be required to
provide the information described below for all assets originated or
sold by the securitizer that were the subject of a demand for
repurchase or replacement with respect to all outstanding Exchange Act-
ABS held by non-affiliates of the securitizer. If the underlying
agreements of an Exchange Act-ABS do not contain a covenant to
repurchase or replace an underlying asset, then no transaction party
would be entitled to demand repurchase or replacement. Requiring
securitizers to report the activity of those Exchange Act-ABS with no
demands might give an incorrect impression of sound underwriting. As
discussed further below, initially, we are proposing that a securitizer
provide the repurchase history for the last five years by filing Form
ABS-15G at the time a securitizer first offers an Exchange Act-ABS or
organizes and initiates an offering of Exchange Act-ABS, registered or
unregistered, after the effective date of the proposed rules, as
adopted. Going forward, a securitizer would be required to provide the
disclosures for all outstanding Exchange Act-ABS on a monthly basis by
filing Form ABS-15G. Information would not be required for the time
period prior to the five-year look back period of the initial filing.
---------------------------------------------------------------------------

    \23\ We propose to adopt this rule as an Exchange Act rule
because of the relationship with other requirements under the
Exchange Act and other statutory requirements we are implementing.
---------------------------------------------------------------------------

    Section 943(2) requires disclosure of fulfilled and unfulfilled
repurchase requests. It does not limit the required disclosure to those
relating only to demands successfully made by the trustee. Therefore
our proposal would require tabular disclosure of assets subject to any
and all demands for repurchase or replacement of the underlying pool
assets as long as the transaction agreements provide a covenant to
repurchase or replace an underlying asset. For instance, we note that
demands for repurchase may not ultimately result in a repurchase or
replacement pursuant to the terms of the transaction agreement, either
because of withdrawn demands or incomplete demands that did not meet
the requirements of a valid demand pursuant to the transaction
agreements.\24\ Furthermore, it may be the case that a repurchase or
replacement may occur whether or not it is determined that the
obligated party was required to repurchase the asset pursuant to the
terms of the transaction agreement.\25\ Securitizers would be permitted
to footnote the table to provide additional explanatory disclosures to
describe the data disclosed. We also note that investors have demanded
that trustees enforce repurchase covenants because transaction
agreements do not typically contain a provision for an investor to
directly make a repurchase demand.\26\ As we stated earlier, Section
943(2) does not limit the required disclosures to those demands
successfully made by the trustee; therefore our proposals would

require investor demands upon a trustee be included in the table,
irrespective of the trustee's determination to make a repurchase demand
on a securitizer based on the investor request. We are concerned,
however, that initially a securitizer may not be able to obtain
complete information from a trustee because it may not have tracked
investor demands. Because securitizers may not have access to
historical information about investor demands made upon the trustee
prior to the effective date of the proposed rules, we are proposing an
instruction that a securitizer may disclose in a footnote, if true,
that a securitizer requested and was able to obtain only partial
information or unable to obtain any information with respect to
investor demands to a trustee that occurred prior to the effective date
of the proposed rules and state that the disclosures do not contain all
demands made prior to the effective date.\27\
---------------------------------------------------------------------------

    \24\ See e.g., comment letters of ASF, Bank of America,
Community Mortgage Banking Project, CRE Finance Council and Mortgage
Bankers Association on the 2010 ABS Proposing Release. The public
comments are available at http://www.sec.gov/comments/s7-08-10/
s70810.shtml.
    \25\ See Section XI.C.2. of the 2010 ABS Proposing Release where
we note that disclosures about an originator's or sponsor's refusal
to repurchase or replace assets put back to them for breach of
representations and warranties might create incentives for
originators to agree to repurchase or replace such assets even in
cases where these assets were not in breach. We explained that if
investors regard such disclosures as indicative of a willingness to
comply with representations and warranties in the future, then
originators and sponsors might try to preserve their reputation by
taking back assets even when they do not have to do so. This might
create an incentive for sponsors and possibly trustees to ask for
repurchase or replacement of poorly performing assets that represent
no breach of representations and warranties. However, a commentator
on the 2010 ABS Proposing Release stated that in certain situations,
it may have the opposite effect, where the threat of a disclosure
requirement may make a sponsor worry that a large number of
successful repurchase claims could indicate that its initial due
diligence, or the originator's loan quality was poor. See letter
from Commonwealth of Massachusetts Attorney General.
    \26\ See Jody Shenn, ``BNY Won't Investigate Countrywide
Mortgage Securities,'' Bloomberg Business Week (Sep. 13, 2010)
available at http://www.businessweek.com/news/2010-09-13/bny-won-t-
investigate-countrywide-mortgage-securities.html (noting the
difficulties that investors are facing to enforce contracts with
respect to repurchase demands) and Al Yoon, ``NY Fed joins other
investors on loan repurchase bid,'' Reuters (Aug. 4, 2010) available
at http://www.reuters.com/article/idUSTRE6736DZ20100804 (noting that
investors have been frustrated with trustees and servicers and are
banding together to force trustees to act on repurchase requests).
See also Kevin J. Buckley, ``Securitization Trustee Issues,'' The
Journal of Structured Finance (Summer 2010) (discussing investors
demands upon trustees to enforce sellers' repurchase obligations).
    \27\ This situation, as well as others, may arise where the
disclosures required by proposed Rule 15Ga-1 alone may necessitate
the disclosure of additional information in order to render the
information not misleading. Securitizers would need to consider the
antifraud provisions under the federal securities laws to determine
what other information, if any, may need to be provided in offering
materials given to an investor.
---------------------------------------------------------------------------

    We are proposing that securitizers provide the information in the
following tabular format in order to aid understanding:

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                Assets that were subject of     Assets that were repurchased or  Assets that were not repurchased   Assets pending repurchase or
                                                                          demand                           replaced                         or replaced                     replacement
    Name of issuing entity      Check if        Name of     ------------------------------------------------------------------------------------------------------------------------------------
                               registered     originator                               (% of                             (% of                             (% of                          (% of
                                                              ()     ($)      pool)    ()     ($)      pool)    ()     ($)      pool)   ()    ($)     pool)
 (a)                                (b)    (c).............  (d)           (e)       (f)       (g)           (h)       (i)       (j)           (k)       (l)       (m)          (n)      (o)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
        Asset Class X                                        ............  ........  ........  ............  ........  ........  ............  ........  ........  ...........  .......  .......
Issuing Entity A.............         X    Originator 1      ............  ........  ........  ............  ........  ........  ............  ........  ........  ...........  .......  .......
CIK ................
                                           Originator 2      ............  ........  ........  ............  ........  ........  ............  ........  ........  ...........  .......  .......
Issuing Entity B.............              Originator 3      ............  ........  ........  ............  ........  ........  ............  ........  ........  ...........  .......  .......
                              ------------------------------------------------------------------------------------------------------------------------------------------------------------------
    Total....................  ..........  ................       $         ........       $         ........       $         ........      $        .......
        Asset Class Y          ..........                    ............  ........  ........  ............  ........  ........  ............  ........  ........  ...........  .......  .......
Issuing Entity C.............  ..........  Originator 2      ............  ........  ........  ............  ........  ........  ............  ........  ........  ...........  .......  .......
                                           Originator 3      ............  ........  ........  ............  ........  ........  ............  ........  ........  ...........  .......  .......
Issuing Entity D CIK         X    Originator 1      ............  ........  ........  ............  ........  ........  ............  ........  ........  ...........  .......  .......
                              ------------------------------------------------------------------------------------------------------------------------------------------------------------------
    Total....................  ..........  ................       $         ........       $         ........       $         ........      $        .......
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

    A single securitizer may have several securitization programs to
securitize different types of asset classes. Therefore, in order to
organize the information in a manner that would be useful for
investors, we are proposing that the securitizer disclose the asset
class and group the information in the table by asset class (column
(a)). We are also proposing that securitizers list the names of all the
issuing entities\28\ of Exchange Act-ABS, listed in order of the date
of formation of the issuing entity in column (a) so that investors may
identify the securities that contain the assets subject to the demands
for repurchase and when the issuing entity was formed.\29\ Because the
Act requires disclosure with respect to all Exchange Act-ABS, Rule
15Ga-1 would require securitizers to provide disclosure for all
Exchange Act-ABS where the underlying agreements include a repurchase
covenant, regardless of whether the transaction was registered with the
Commission. Additionally, if any of the Exchange Act-ABS of the issuing
entity were registered under the Securities Act, the Central Index Key
(``CIK'') number of the issuing entity would be required so that
investors may locate additional publicly available disclosure, if
applicable.
---------------------------------------------------------------------------

    \28\ Issuing entity is defined in Item 1101(f) of Regulation AB
[17 CFR 229.1101(f)] as the trust or other entity created at the
direction of the sponsor or depositor that owns or holds the pool
assets and in whose name the asset-backed securities supported or
serviced by the pool assets are issued.
    \29\ In a stand-alone trust structure, usually backed by a pool
of amortizing loans, a separate issuing entity is created for each
issuance of ABS backed by a specific pool of assets. The date of
formation of the issuing entity would most likely be at the same
time of the issuance of the ABS. In a securitization using a master
trust structure, the ABS transaction contemplates future issuances
of ABS by the same issuing entity, backed by the same, but expanded,
asset pool. Master trusts would organize the data using the date the
issuing entity was formed, which would most likely be earlier than
the date of the most recent issuance of securities.
---------------------------------------------------------------------------

    So that investors may distinguish between transactions that were
registered, and those that were not, we are also proposing that
securitizers check the box in column (b) to indicate whether any
Exchange Act-ABS of the issuing entity were registered under the
Securities Act. We believe this indicator would provide important
information so an investor may locate additional publicly available
disclosure for registered transactions, if applicable.
    The Act also provides that the disclosure is required ``so that
investors may identify asset originators with clear underwriting
deficiencies.'' \30\ Therefore, we are proposing that securitizers
further break out the information by originator of the underlying
assets in column (c).
---------------------------------------------------------------------------

    \30\ See Section 943(2) of the Act.
---------------------------------------------------------------------------

    Because the Act requires disclosure of all ``fulfilled and
unfulfilled'' repurchase requests, we are proposing in Rule 15Ga-1 that
securitizers disclose the assets that were subject of the demand, the
assets that were repurchased or replaced and the assets that were not
repurchased or replaced. In order to provide investors with useful
information about the repurchase requests in relation to the overall
pool of assets, we are proposing that securitizers present the number,
outstanding principal balance and percentage by principal balance of
the assets that were subject of demand to repurchase or replace for
breach of representations and warranties (columns (d) through (f)); the
number, outstanding principal balance and percentage by principal
balance of assets that were repurchased or replaced for breach of
representations and warranties (columns (g) through (i)); and the
number, outstanding principal balance and percentage by principal
balance of assets that were not repurchased or replaced for breach of
representations and warranties (columns (j) through (l)).\31\
---------------------------------------------------------------------------

    \31\ If the ABS were offered in a registered transaction, an
investor may be able to locate additional detailed information. In
the 2010 ABS Proposing Release, the Commission also proposed that
issuers be required to provide loan-level disclosure of repurchase
requests on an ongoing basis. Under the proposal, an issuer, with
each periodic report on a Form 10-D, would have to indicate whether
a particular asset has been repurchased from the pool. If the asset
has been repurchased, then the registrant would have to indicate
whether a notice of repurchase has been received, the date the asset
was repurchased, the name of the repurchaser and the reason for the
repurchase. See previously proposed Item 1(i) of Schedule L-D [Item
1121A of Regulation AB] in the 2010 ABS Proposing Release.

---------------------------------------------------------------------------

    Additionally, we are proposing to require disclosure of the number,
outstanding principal balance and percentage by principal balance of
the assets that are pending repurchase or replacement and proposing an
instruction to include a footnote to the table that provides narrative
disclosure of the reasons why repurchase or replacement is pending
(columns (m) through (o)). For example, the securitizer would indicate
by footnote if pursuant to the terms of a transaction agreement, assets
have not been repurchased or replaced pending the expiration of a cure
period. Without these additional columns, the disclosures about
fulfilled and unfulfilled repurchase requests of a securitizer alone
may not provide clear and complete disclosure about the repurchase
request history. For instance, some transaction agreements specify a
cure period that typically lasts 60-90 days.\32\ Including those
repurchase requests that are within a cure period as assets that were
not repurchased or replaced (columns (j) through (l)) would provide
inaccurate disclosure about the current pending status of those
repurchase requests.
---------------------------------------------------------------------------

    \32\ In response to our ABS 2010 Proposing Release, some
commentators expressed concern about the timing of providing
repurchase disclosures, noting that the person preparing repurchase
disclosures may not be in a position to know what percentage of
demands made in a period did not result in repurchase due to cure
periods provided in the transaction agreements that typically last
60-90 days. See letters from the American Securitization Forum
(``ASF'') and Wells Fargo & Company on the 2010 ABS Proposing
Release.
---------------------------------------------------------------------------

    Lastly, we are proposing that the table include totals by asset
class for columns that require numbers of assets and principal amounts
(columns (d), (e), (g), (h), (j), (k), (m) and (n)).\33\
---------------------------------------------------------------------------

    \33\ See letter from Association of Mortgage Investors on the
2010 ABS Proposing Release (requesting that disclosure of
information regarding claims made and satisfied under representation
and warranties provisions of the transaction documents be broken
down by securitization and then aggregated).
---------------------------------------------------------------------------

    The Act does not specify when the disclosure should first be
provided, or the frequency with which it should be updated. We are
proposing to require that securitizers first be required to file Form
ABS-15G at the time a securitizer first offers an Exchange Act-ABS or
organizes and initiates an offering of Exchange Act-ABS, registered or
unregistered, after the effective date of the proposed rules, as
adopted.\34\ The initial filing would include the repurchase demand and
repurchase and replacement history of all outstanding Exchange Act-ABS
of the securitizer with respect to which the underlying transaction
agreements provide a covenant to repurchase or replace an underlying
asset for breach of a representation or warranty for the last five
years. The initial filing would be required to include all of the
information in proposed Rule 15Ga-1, even if there had been no demands
to repurchase or replace assets to report with respect to any issuing
entity of an Exchange-Act ABS securitized by a securitizer. We believe
that the ability to compare all issuing entities and the originators of
the underlying pools would provide useful information for investors by
making the disclosures comparable across securitizers, so that
consistent with the purposes of Section 943, an investor may identify
originators with clear underwriting deficiencies.
---------------------------------------------------------------------------

    \34\ Filing proposed Form ABS-15G would not foreclose the
reliance of an issuer on the private offering exemption in the
Securities Act of 1933 and the safe harbor for offshore transactions
from the registration provisions in Section 5 [15 U.S.C. 77e].
However, the inclusion of information beyond that required in
proposed Rule 15Ga-1 may jeopardize such reliance by constituting a
public offering or conditioning the market for the ABS being offered
under an exemption.
---------------------------------------------------------------------------

    While Section 943 does not limit the time period for disclosure, we
have proposed in Rule 15Ga-1 to limit the disclosure to Exchange Act-
ABS that remain outstanding and are held by non-affiliates because we
believe securitizers would more likely have ready access to this
information, and it is more likely to be relevant to investors than
information about securities that are no longer outstanding and held by
non-affiliates. While we believe that Congress intended to provide
investors with historical information about repurchase activity so that
investors may identify asset originators with clear underwriting
deficiencies,\35\ we also recognize that securitizers may not have
historically collected the information required under our proposal.\36\
We are proposing that the initial disclosures be limited to the last
five years of activity in order to balance the requirements of Section
943 and the burden on securitizers to provide the historical
disclosures. Therefore, any demand, repurchase or replacement that had
occurred within the five years immediately preceding the initial
filing, as of the end of the preceding month, would need to be
disclosed in the table.\37\
---------------------------------------------------------------------------

    \35\ See letter from Securities Industry Financial Markets
Association (``SIFMA'') on the 2010 ABS Proposing Release (noting
that their investor members believe that issuers should be required
to make disclosures about repurchase requests regardless of the date
of the securitization).
    \36\ See e.g., comment letters from ASF, Bank of America,
Financial Services Roundtable and the Mortgage Bankers Association
on the 2010 ABS Proposing Release.
    \37\ For the initial filing, we recognize that demands may have
been made prior to the initial five-year look back date and that
resolution may have occurred after that date. In this case, a
securitizer would need to disclose that a demand was made, even
though it occurred prior to the five-year look back date.
---------------------------------------------------------------------------

    We are also proposing that securitizers file proposed Form ABS-15G,
periodically on a monthly basis with updated information so that,
consistent with the purpose of Section 943 of the Act, an investor may
monitor the demand, repurchase and replacement activity across all
Exchange Act-ABS issued by a securitizer.\38\ For registered
transactions, most ABS distribute payments monthly and file Forms 10-D
on a monthly basis. Similarly, given the established frequency of
reporting, we believe proposed Rule 15Ga-1 disclosure should be
provided to investors on a monthly basis and filed on Form ABS-15G on
EDGAR within 15 calendar days after the end of each calendar month.\39\
---------------------------------------------------------------------------

    \38\ See letter from Prudential Fixed Income Management on the
2010 ABS Proposing Release (noting that claims made against a
sponsor should be included in offering materials and regularly
reported, together with detail that clarifies the number of such
claims that were accepted by the sponsor and the number of claims
that were and were not approved).
    \39\ Form 10-Ds are required to be filed within 15 days of each
required distribution date on the asset-backed securities. See
General Instruction A.2. of Form 10-D [17 CFR 249.312]. Because
securitizers may sponsor various asset classes, we believe it would
be difficult to tie the timing requirements of Rule 15Ga-1
disclosure to the timing of payments on the securities.
---------------------------------------------------------------------------

    Under the proposal, securitizers would be required to continue
periodic reporting through and until the last payment on the last
Exchange Act-ABS outstanding held by a non-affiliate that was issued by
the securitizer or an affiliate. We are also proposing that
securitizers be required to file Form ABS-15G to provide a notice to
terminate the reporting obligation and disclose the date the last
payment was made.

Request for Comment:

    5. Is the proposed requirement to require that any securitizer of
an Exchange Act-ABS transaction disclose fulfilled and unfulfilled
repurchase requests in a table appropriate? Would

another format be more appropriate or useful to investors?
    6. Should we require, as proposed, that securitizers list all
previous issuing entities with currently outstanding ABS where the
underlying transaction agreements include a repurchase covenant, even
if there were no demands to repurchase or replace assets in that
particular pool? Should we require, as proposed, that securitizers with
currently outstanding Exchange Act-ABS held by non-affiliates list all
originators related to every issuing entity even if there were no
demands to repurchase or replace assets related to that originator for
that particular pool? Put another way, would it be useful for investors
to compare all the issuing entities and originators, related to one
securitizer, listed in the table, so that investors may identify asset
originators with clear underwriting deficiencies, as provided in the
Act?
    7. Would it be appropriate for securitizers to omit the table if a
securitizer had no prior demands for repurchases or replacements? If
so, how would an investor be able to know why the securitizer omitted
the disclosure? In lieu of a table that displayed no demands for
repurchases or replacements, would it be appropriate for a securitizer
to provide narrative or check box disclosure stating that no demands
were made for any asset securitized by the securitizer?
    8. Is it appropriate to limit disclosure to Exchange Act-ABS that
remain outstanding and held by non-affiliates, as proposed? Would such
a limitation be consistent with the Act? Alternatively, should
disclosure be required with respect to Exchange Act-ABS that are no
longer outstanding? Would such disclosure reveal potentially important
information? Would it be appropriate to require disclosure regarding
Exchange Act-ABS that were outstanding during a recent period, such as
one, three, or five years?
    9. Should the disclosure requirement only be applied prospectively,
i.e., disclosure would be required only with respect to repurchase
demands and repurchases and replacements beginning with Exchange Act-
ABS issued after the effective date of the rule? Should disclosure only
be required with respect to repurchase activity after the effective
date? If so, please explain why limiting disclosure to activity
regarding Exchange Act-ABS issued after the effective date would be
consistent with the Act, as it specifies that the disclosure be
provided by any securitizer across all trusts.
    10. In implementing the requirements of Section 943, should the
disclosure requirement initially be limited to the last five years, as
proposed? Would a different time frame be more appropriate, e.g., the
last three, seven or ten years of activity? Underwriting standards of
originators may change over time. While information regarding
repurchases within a recent time period may assist investors in
identifying originators with current underwriting deficiencies, is
older information, such as information about repurchases within a time
period of ten years, less useful in identifying current underwriting
deficiencies? \40\ Would information that covers the last three, five,
seven or ten years of repurchase activity provide investors with the
information they need so that they ``may identify asset originators
with clear underwriting deficiencies''? To what extent would disclosure
older than such a period add significant burdens and costs and produce
information that would be of marginal utility to investors?
---------------------------------------------------------------------------

    \40\ In a response to our 2010 ABS Proposing Release, the ASF
noted in its comment letter that ``the requirement to report three
years worth of repurchase activity would potentially result in a
flood of unhelpful disclosure about transactions involving unrelated
asset classes, particularly with respect to sponsors or originators
that are large, diversified financial institutions engaging in
securitization and sales of multiple asset classes through
affiliated but often separately managed business units.''
---------------------------------------------------------------------------

    11. Is our proposed instruction to permit securitizers to omit
disclosure of investor demands made upon the trustee prior to the
effective date of the proposed rules if the information is unavailable
and provide footnote disclosure, if true, that the table omits such
demands and that the securitizer requested and was unable to obtain the
information appropriate? If not, how would securitizers obtain the
information about investor demands upon a trustee prior to the
effective date of the proposed rules, as adopted?
    12. Should the requirement only cover the last three, five, seven
or ten years of repurchase requests on an ongoing basis? Would this
format on an ongoing basis provide information in a more easily
understandable manner? Would it still allow an investor to ``identify
asset originators with clear underwriting deficiencies''?
    13. Are there any other agreements, outside of the related
transaction agreements for an asset-backed security that provide for
repurchase demands and repurchases and replacements? If so, please tell
us what those agreements are and why securitizers should be required to
report the information, including why that information would be
material to an investor in a particular asset-backed security.\41\
---------------------------------------------------------------------------

    \41\ See comment letter from Massachusetts Office of Attorney
General on the 2010 ABS Proposing Release (noting that side letter
agreements between a sponsor and an originator may contain early
payment default warranties and that the existence of such warranties
often have an effect upon the performance of a securitization).
---------------------------------------------------------------------------

    14. Is the information proposed to be required in the table
appropriate? Is there any other information that should be presented in
the table that would be useful to investors? Is the proposed disclosure
regarding pending repurchase requests appropriate? Should we specify
that securitizers provide more detail about the reasons why the assets
were not repurchased or why the assets are pending repurchase or
replacement? For example, should we require more detail such as the
date of claim, the date of repurchase, whether claims have been
referred to arbitration, whether the claims are in a cure period, and
the costs associated and expenses born by each issuing entity? \42\
Should we require securitizers to provide narrative disclosure of the
reasons why repurchase or replacement is pending, as proposed? If so,
should we specify the level of detail to be provided regarding pending
asset repurchase or replacement requests? For instance, should we
specify categories for the reasons why the request is pending, e.g.,
cure period, arbitration, etc.
---------------------------------------------------------------------------

    \42\ See e.g., comment letters of Metropolitan Life Insurance
Company and the SIFMA on the 2010 ABS Proposing Release.
---------------------------------------------------------------------------

    15. Section 943 of the Act requires that ``all fulfilled and
unfulfilled repurchase requests across all trusts'' be disclosed.
Should we require, as proposed, that all demands for repurchase be
disclosed in the table? Some commentators on the 2010 ABS Proposing
Release expressed concerns about disclosing demands for repurchase that
ultimately did not result in a repurchase or replacement pursuant to
the terms of the transaction agreement, either because of withdrawn
demands or incomplete demands that did not meet the requirements of the
transaction agreements.\43\ In order to address commentator's concerns,
should we also require, by footnote to the table, disclosure of whether
the repurchase or replacement was required by the transaction
agreements or whether it occurred for some other reason? Should the
disclosure indicate the type of representation or warranty that led to
the repurchase or replacement?
---------------------------------------------------------------------------

    \43\ See e.g., comment letters of ASF, Bank of America,
Community Mortgage Banking Project, CRE Finance Council and Mortgage
Bankers Association on the 2010 ABS Proposing Release.

---------------------------------------------------------------------------

    16. Is our proposal to require a securitizer to file its initial
Form ABS-15G at the time it first offers Exchange-Act ABS or organizes
and initiates an offering of Exchange Act-ABS after the implementation
date of the proposed rules appropriate? What are other possible
alternatives to trigger the initial filing obligation?
    17. Is our proposal to require the disclosure on a monthly basis
appropriate? If not, what would be the appropriate interval for the
disclosures, e.g., quarterly or annually?
    18. Is our proposal to require that Form ABS-15G be filed within 15
calendar days after the end of each calendar month appropriate? If not,
would a shorter or longer timeframe be more appropriate, e.g., four
days or twenty days? Please tell us why.
    19. We note that the transaction agreements for certain types of
ABS, such as CDOs, may not typically contain a covenant to repurchase
or replace an underlying asset. Is it appropriate to exclude, as
proposed, those Exchange Act-ABS with transaction agreements that do
not contain a covenant to repurchase or replace the underlying assets?
    20. Should the data in the table be tagged? If so, should the
tagging be in XML or is a different tagging schema appropriate? If
tagging is appropriate, would a phase-in period in which the disclosure
would be provided without tagging pending completion of necessary
technical specifications be appropriate? In order to tag the data, we
would need to develop definitions that would result in consistent and
comparable data across all issuing entities of all securitizers. For
instance, how should we specify that securitizers tag the identity of
an originator to provide consistency across disclosures provided by all
securitizers? Should we assign codes that would specifically identify
each originator? Or would text entry of the name of the originator be
sufficient? Similarly, should we specify a unique code for all the
issuing entities? For example, registered transactions would have a CIK
number assigned for the issuing entity; however, unregistered
transactions may not have a unique method of identification. What other
definitions or responses would we need to specify in order to make the
disclosure comparable across originators and securitizers?
4. Proposed Form ABS-15G
    The disclosures required by proposed Rule 15Ga-1 do not fit neatly
within the framework of existing Securities Act and Exchange Act Forms
because those forms relate to registered ABS transactions and
unregistered ABS transactions are not required to file those forms.\44\
Therefore, we are proposing new Form ABS-15G to be filed on EDGAR so
that parties obligated to make disclosures related to Exchange Act-ABS
under Rule 15Ga-1 could file the disclosures on EDGAR. As discussed
above, proposed Rule 15Ga-1 would require securitizers to disclose
repurchase demand and repurchase and replacement history with respect
to registered and unregistered Exchange Act-ABS transactions for as
long as the securitizer has ABS outstanding and held by non-affiliates.
Consistent with current filing practices for other ABS forms,\45\ we
are proposing, for purposes of making the disclosures required by Rule
15Ga-1, that Form ABS-15G be signed by the senior officer of the
securitizer in charge of the securitization.
---------------------------------------------------------------------------

    \44\ However, a portion of the information required by proposed
Rule 15Ga-1 would be required in a registration statement and in
periodic reports. We discuss those proposals below.
    \45\ The Form 10-K report for ABS issuers must be signed either
on behalf of the depositor by the senior officer in charge of
securitization of the depositor, or on behalf of the issuing entity
by the senior officer in charge of the servicing. See General
Instruction J.3. of Form 10-K [17 CFR 249.310] In addition, the
certifications for ABS issuers that are required under Section 302
of the Sarbanes-Oxley Act of 2002 [15 U.S.C. 7241] must be signed
either on behalf of the depositor by the senior officer in charge of
securitization of the depositor if the depositor is signing the Form
10-K report, or on behalf of the issuing entity by the senior
officer in charge of the servicing function of the servicer if the
servicer is signing the Form 10-K report. In our 2010 ABS Proposing
Release, we also proposed to require that the senior officer in
charge of securitization of the depositor sign the registration
statement (either on Form SF-1 or Form SF-3) for ABS issuers. See
Section II.F. of the 2010 ABS Proposing Release.
---------------------------------------------------------------------------

Request for Comment:

    21. Is our proposal to require proposed Rule 15Ga-1 disclosures on
new Form ABS-15G appropriate?
    22. Securitizers would be required, as proposed, to file Form ABS-
15G on EDGAR. If a securitizer has already been issued a CIK number, we
would expect Form ABS-15G to be filed under that number. However, a
securitizer may already be a registrant that has other reporting
requirements under the Securities Act or the Exchange Act. Should we
assign a different file number to Form ABS-15G filings in order to
differentiate Form ABS-15G filings made by a registrant in its capacity
as a securitizer, from other filings made pursuant to its own reporting
requirements under the Securities Act and the Exchange Act? Should we
also provide on the SEC website the ability to exclude, include or show
only Form ABS-15G for a particular CIK number in order make it easier
to locate these filings on EDGAR?
    23. Instead of requiring, as proposed, that securitizers provide
the Rule 15Ga-1 disclosures on Form ABS-15G, should we instead require
that securitizers provide all the disclosures required by Section 943
of the Act in a manner consistent with disclosures in prospectuses and
ongoing reports in a registered transaction? For instance, for
registered offerings, would it be appropriate to permit issuers to
satisfy their disclosure obligation by including all of the information
required by proposed Rule 15Ga-1 in prospectuses and periodic reports
on behalf of the securitizer for all of the affiliated trusts of a
securitizer? Assuming that some securitizers offer several ABS across
many asset classes, would taking this approach result in a prospectus
that would be unwieldy considering the volume of information that would
be required? If we took this approach, then how would that information
be conveyed to investors in unregistered offerings, both initially and
on an ongoing basis? Would securitizers be able to identify all of the
investors that would be entitled to receive the information pursuant to
Section 943 of the Act? How often should the information be conveyed to
investors? What method would be used to convey the information to
investors? Would securitizers post the disclosures on a Web site?
    24. We are proposing that for purposes of making the disclosures
required by Rule 15Ga-1 that Form ABS-15G be signed by the senior
officer in charge of the securitization of the securitizer. Is there a
more appropriate party to sign the form? If so, please tell us who and
why.
5. Offshore Sales of Exchange-Act ABS
    The market for Exchange Act-ABS is global.\46\ Securitizers in the
United States may sell ABS to offshore purchasers as part of a
registered or unregistered offering. Under the proposal, these
transactions would be subject to the requirements of proposed Rule
15Ga-1. In addition, U.S. investors may participate in offerings of ABS
that primarily are offered by foreign securitizers to purchasers
outside of the

United States. For example, a small proportion of a primarily offshore
offering of ABS may be made available to U.S. investors pursuant to
Section 4(2) of the Securities Act \47\ or Securities Act Rule
144A.\48\
---------------------------------------------------------------------------

    \46\ Indeed, the International Organization of Securities
Commissions (IOSCO) cites the recent crisis in the subprime markets,
stemming from defaulted mortgage loans in the United States and
affected by issues related to liquidity and transparency, as
evidence of the interrelation of today's global markets. See the
Report on the Subprime Crisis--Final Report, Report of the Technical
Committee of IOSCO, May 2008, available at https://www.iosco.org/
library/pubdocs/pdf/IOSCOPD273.pdf.
    \47\ 15 U.S.C. 77d(2). Section 4(2) provides an exemption from
registration for transactions by an issuer not involving any public
offering.
    \48\ Securities Act Rule 144A [17 CFR 230.144A] provides a safe
harbor for a reseller of securities from being deemed an underwriter
within the meaning of Sections 2(a)(11) and 4(1) of the Securities
Act for the offer and sale of non-exchange listed securities to
``qualified institutional buyers'' (QIBs), as defined in Rule 144A.
---------------------------------------------------------------------------

    We recognize that Section 943 does not specify how its requirements
apply to offshore transactions. As noted, consistent with Section 943,
proposed Rule 15Ga-1 would require securitizers to disclose information
about unregistered transactions, including those sold in unregistered
transactions outside the United States. Securities that are sold in
foreign markets and assets originated in foreign jurisdictions may be
subject to different laws, regulations, customs and practices which can
raise questions as to the appropriateness of the disclosures called for
under Form ABS-15G. Although our proposed rules are required by the
Act, and we believe the added protections of our rules would benefit
investors who purchase securities in these offerings, we are mindful
that the imposition of a filing requirement in connection with private
placements of ABS in the United States may result in foreign
securitizers seeking to avoid the filing requirement by excluding U.S.
investors from purchasing portions of ABS primarily offered outside the
United States, thus depriving U.S. investors of diversification and
related investment opportunities.

Request for Comment:

    25. Are there any extra or special considerations relating to these
circumstances that we should take into account in our rules? Should our
rules permit securitizers to exclude information from Form ABS-15G with
respect to ``foreign-offered ABS,'' and if so, should foreign-offered
ABS be defined to include Exchange Act-ABS that were initially offered
and sold in accordance with Regulation S, the payment to holders of
which are made in non-U.S. currency, and have foreign assets (i.e.,
assets that are not originated in the U.S.) that comprise at least a
majority of the value of the asset pool? For this purpose, should the
foreign asset composition threshold be higher or lower (e.g., 40%, 60%,
or 80%)? Would another definition be more appropriate?
    26. Should our rules require securitizers that are foreign private
issuers \49\ to provide information on Form ABS-15G for those Exchange
Act-ABS that are to be offered and sold in the United States pursuant
to an exemption in an unregistered offering, as proposed? Instead
should our rules only require disclosure about Exchange Act-ABS as to
which more than a certain percentage (e.g., 5%, 10% or 20%) of any
class of such Exchange Act-ABS are sold to U.S. persons?
---------------------------------------------------------------------------

    \49\ 17 CFR 240.3b-4.
---------------------------------------------------------------------------

B. Proposed Disclosure Requirements in Regulation AB Transactions

    The requirements in Section 943 of the Act are in many ways quite
similar to the Commission's proposal for additional disclosure
regarding fulfilled and unfulfilled repurchase requests. In our 2010
ABS Proposing Release,\50\ we proposed expanded disclosure regarding
originators \51\ and sponsors,\52\ such as information for certain
identified originators and the sponsor relating to the amount of the
originator's or sponsor's publicly securitized assets that, in the last
three years, has been the subject of a demand to repurchase or
replace.\53\ However, the Commission's proposals would only apply to
registered offerings and would only require disclosure about other
registered offerings, if material. In contrast, as we discuss in our
proposals above, Section 943 of the Act requires similar but expanded
disclosure by requiring that any securitizer of Exchange Act-ABS
disclose fulfilled and unfulfilled repurchase requests across all
trusts aggregated by securitizer, so that investors may identify asset
originators with clear underwriting deficiencies.\54\ In order to
conform our 2010 ABS proposals to the rule proposed today to implement
Section 943 of the Act, we are re-proposing our previous proposals for
Regulation AB with respect to disclosures regarding sponsors in
prospectuses and with respect to disclosures about the asset pool in
periodic reports, so that issuers would be required to include the
disclosures in the same format as required by proposed Rule 15Ga-
1(a).\55\ Under our revised proposals, issuers of Reg AB-ABS would need
to provide disclosures in the same format as proposed Rule 15Ga-1(a)
within a prospectus and within ongoing reports on Form 10-D as
described below. As we stated in the 2010 ABS Proposing Release, we
believe that investors must be able to readily access and understand
the information for a specific offering.\56\ Consistent with that
belief, we are proposing that certain repurchase history should be
presented in the body of the prospectus and within ongoing reports in
order to facilitate investor understanding and eliminate the need to
locate all of the information that may be disclosed elsewhere and by a
different party. Even though our proposals discussed above would
require securitizers to provide repurchase history on Form ABS-15G, we
believe that issuers should provide a subset of that information to
investors in the body of a prospectus or a periodic report.\57\
However, the obligation of an

issuer to provide the disclosures in prospectuses and in ongoing
reports under our proposed changes to Regulation AB would be
independent from, and would not alleviate the disclosure obligations of
a securitizer under, proposed Rule 15Ga-1.
---------------------------------------------------------------------------

    \50\ See Section V.A. of the 2010 ABS Proposing Release.
    \51\ See previously proposed Item 1110(c) of Regulation AB in
the 2010 ABS Proposing Release.
    \52\ See previously proposed Item 1104(f) of Regulation AB in
the 2010 ABS Proposing Release.
    \53\ The proposal would amend Regulation AB to require sponsors
and originators (of greater than 20% of the assets underlying the
pool) to disclose the amount, if material, of publicly securitized
assets originated or sold by the sponsor that were the subject of a
demand to repurchase or replace for breach of the representations
and warranties concerning the pool assets that has been made in the
prior three years pursuant to the transaction agreements on a pool
by pool basis as well as the percentage of that amount that were not
then repurchased or replaced by the sponsor. Of those assets that
were not then repurchased or replaced, disclosure would be required
regarding whether an opinion of a third party not affiliated with
the sponsor/originator had been furnished to the trustee that
confirms that the assets did not violate the representations and
warranties. See proposed Items 1104(f), 1110(c) and 1121(c) of
Regulation AB in the 2010 ABS Proposing Release.
    \54\ See Section 943 of the Act. We note that several
commentators on the 2010 ABS Proposing Release expressed concerns
about the difficulty of producing data to comply with the proposed
requirement to report three years of repurchase activity. See e.g.,
letters of ASF, Bank of America, Financial Services Roundtable and
Mortgage Bankers Association. However, in light of the requirements
of Section 943 of the Act, we continue to believe that the
information is important to include in prospectuses.
    \55\ As discussed above, in the 2010 ABS Proposing Release, we
proposed to amend Item 1110(c) of Regulation AB to require
originators (of greater than 20% of the assets underlying the pool)
to disclose the amount, if material, of publicly securitized assets
originated or sold by the sponsor that were the subject of a demand
to repurchase or replace for breach of the representations and
warranties concerning the pool assets that has been made in the
prior three years pursuant to the transaction agreements on a pool
by pool basis as well as the percentage of that amount that were not
then repurchased or replaced by the sponsor. That proposal remains
outstanding.
    \56\ In the 2010 ABS Proposing Release, we proposed that issuers
provide all disclosures in one prospectus, instead of the current
practice of providing information in a base prospectus and
prospectus supplement to address concerns that the base and
supplement format resulted in unwieldy documents with excessive and
inapplicable disclosure that is not useful to investors. See Section
II.D.1 of the 2010 ABS Proposing Release.
    \57\ We are not proposing that issuers include all of the
information that would be required of a securitizer under proposed
Rule 15Ga-1 in prospectuses because information about other asset
classes and information older than three years may make the size of
the prospectus unwieldy and investors should have ready access to
more current information. We are also not proposing that issuers
include all of the proposed Rule 15Ga-1 in Form 10-Ds for the same
reasons, and because the purpose of Form 10-D is to provide periodic
performance of a specific asset pool.
---------------------------------------------------------------------------

    We are revising and re-proposing our previous proposal to amend
Item 1104 of Regulation AB. As noted above, the Commission's previous
proposals applied to disclosure of a sponsor's repurchase demand and
repurchase and replacement history concerning the last three years with
respect to other registered transactions, if material. In order to
conform our previous proposal to the format of the information that
would be provided by the rule proposed today to implement Section 943
of the Act, we are proposing that if the underlying transaction
agreements provide a covenant to repurchase or replace an underlying
asset for breach of a representation or warranty, then issuers would be
required to provide in the body of the prospectus disclosure of a
sponsor's repurchase demand and repurchase and replacement history for
the last three years, pursuant to the format proscribed in proposed
Rule 15Ga-1(a). In addition, we are also proposing to limit the
disclosure required in the prospectus to repurchase history for the
same asset class as the securities being registered. We are also
excluding the materiality threshold that was previously proposed as
Section 943 includes no such standard. Also, because we believe the
complete historical information about repurchase activity may be useful
to investors, an issuer would be required to reference the Form ABS-15G
filings made by the securitizer (i.e., sponsor) of the transaction and
disclose the CIK number of the securitizer so that investors may easily
locate Form ABS-15G filings on EDGAR.
    Our previous proposal would amend Item 1121 of Regulation AB so
that issuers would be required to disclose the repurchase demand and
repurchase and replacement history with respect to assets that underlie
a particular ABS on an ongoing basis in periodic reports on Form 10-D,
if material.\58\ We are revising and re-proposing our previous proposal
to require that issuers provide in Form 10-D, repurchase demand and
repurchase and replacement disclosure regarding the assets in the pool
in the format prescribed by proposed Rule 15Ga-1(a). In order to
conform our previous proposal to the rule proposed today to implement
Section 943 of the Act, we are also excluding the materiality threshold
that was previously proposed. Because we believe the complete
historical information about repurchase activity may be useful to
investors, the Form 10-D would also be required to include a reference
to the Form ABS-15G filings made by the securitizer of the transaction
and disclose the CIK number of the securitizer so that investors may
easily locate Form ABS-15G filings on EDGAR. As discussed above,
providing repurchase history disclosure for a particular pool in Form
10-D, is independent from and would not alleviate a securitizer's
obligation to disclose ongoing information for all of their
transactions as required by proposed Rule 15Ga-1.
---------------------------------------------------------------------------

    \58\ See previously proposed Item 1121(c) and Section V.A. of
the 2010 ABS Proposing Release.
---------------------------------------------------------------------------

Request for Comment:

    27. Is our re-proposal to require disclosure pursuant to the format
prescribed in Rule 15Ga-1(a) for the same asset class in prospectuses
and for pool assets in periodic reports appropriate? Is it appropriate
to limit the disclosure in prospectuses to the last three years of
activity, as proposed? Would a different period (e.g., one or five
years) be more appropriate?
    28. Is it appropriate to omit a materiality requirement for
disclosures in prospectuses, as proposed? What issues would arise by
creating two different disclosure standards between what would be
required to be disclosed in prospectuses and what would be disclosed by
securitizers on Form ABS-15G? Are there any ways to address those
issues?
    29. Should we permit issuers to incorporate the repurchase demand
and repurchase and replacement disclosure by reference from Form ABS-
15G, instead of requiring that it be provided in the body of the
prospectus or Form 10-D? Would it be burdensome for investors to search
elsewhere to locate disclosure that would otherwise be included in a
prospectus?
    30. In the 2010 ABS Proposing Release, the Commission also proposed
that originators of over 20% of the pool assets provide disclosure
regarding the fulfilled and unfulfilled repurchase requests on a pool
by pool basis for publicly securitized assets.\59\ If we were to adopt
that proposal, should we make any changes to conform that proposal
given the information that would be required by proposed Rule 15Ga-
1(a)? For example, should that information be provided in the same
format as proposed Rule 15Ga-1(a) and should we require disclosures
with respect to all originators of the pool assets? \60\ Or is
disclosure unnecessary in light of the other disclosures required by
proposed Rule 15Ga-1?
---------------------------------------------------------------------------

    \59\ See proposed Item 1110(c) of Regulation AB in the 2010 ABS
Proposing Release.
    \60\ Originators may sell their assets to multiple securitizers.
Proposed Rule 15Ga-1 would not require securitizers to disclose the
demand, repurchase and replacement activity across all trusts across
multiple securitizers that may contain an originator's assets. For
example, under proposed Rule 15Ga-1, if securitizers A, B and C
securitize the loans of an originator, Securitizer A would only need
to disclose the fulfilled and unfulfilled repurchase request
activity with respect to loans with respect to Securitizer A
securitizations. As we discuss above, proposed Rule 15Ga-1 would
require disclosure that indicates the name of the originator in
order to permit ``investors [to] identify asset originators with
clear underwriting deficiencies,'' as required by Section 943 of the
Act.
---------------------------------------------------------------------------

C. Proposed Disclosure Requirements for NRSROs

    We are proposing to add new Exchange Act Rule 17g-7, which would
implement Section 943(1) of the Act by requiring an NRSRO to make
certain disclosures in any report accompanying a credit rating relating
to an asset-backed security.\61\ Specifically, in accordance with
Section 943(1), Rule 17g-7 would require an NRSRO \62\ to include a
description of the representations, warranties and enforcement
mechanisms available to investors and a description of how they differ
from the representations, warranties and enforcement mechanisms in
issuances of similar

securities.\63\ As discussed above, the Act also amended the Exchange
Act to include the definition of an ``asset-backed security'' and
Section 943 of the Act references that definition.\64\ Therefore, Rule
17g-7 would provide that the NRSRO must provide the disclosures with
respect to any Exchange Act-ABS, whether or not the security is offered
in a transaction registered with the SEC.
---------------------------------------------------------------------------

    \61\ In June 2008, the SEC proposed a new Rule 17g-7 that would
have required an NRSRO to publish a report containing certain
information each time the NRSRO published a credit rating for a
structured finance product or, as an alternative, use ratings
symbols for structured finance products that differentiated them
from the credit ratings for other types of debt securities. See
Exchange Act Release No. 57967 (June 16, 2008), [73 FR 36212]. In
November 2009, the SEC announced that it was deferring consideration
of action on that proposal and separately proposed a new Rule 17g-7
to require annual disclosure by NRSROs of certain information. See
Proposed Rules for Nationally Recognized Statistical Rating
Organizations, SEC Release 34-61051 (November 23, 2009), [74 FR
63866]. Although we are proposing a new rule with the same rule
number, that proposal remains outstanding.
    \62\ Current Item 1111(e) of Regulation AB [17 CFR 1111(e)]
already requires issuers to disclose the representations and
warranties related to the transaction in prospectuses. Additionally,
in the 2010 ABS Proposing Release, the Commission proposed changes
to this item to require a description of any representation and
warranty relating to fraud in the origination of the assets, and a
statement if there is no such representation or warranty.
    \63\ As discussed further in Section V.B.6. below, we anticipate
that one way an NRSRO could fulfill the requirement to describe how
representations, warranties and enforcement mechanisms differ from
those provided in similar securities would be to review previous
issuances both on an initial and an ongoing basis in order to
establish ``benchmarks'' for various types of securities and revise
them as appropriate.
    \64\ See Section 3(a)(77) of the Exchange Act, as amended by the
Act.
---------------------------------------------------------------------------

    Section 943, by its terms, applies to any report accompanying a
credit rating for an ABS transaction, regardless of when or in what
context such reports and credit ratings are issued. Proposed Rule 17g-7
is intended to reflect the broad scope of this congressional mandate.
In addition, we are proposing a note to the proposed rule which would
clarify that for the purposes of the proposed rule, a ``credit rating''
would include any expected or preliminary credit rating issued by an
NRSRO.\65\ In ABS transactions, pre-sale reports are typically issued
by an NRSRO at the time the issuer commences the offering and typically
include an expected or preliminary credit rating and a summary of the
important features of a transaction. Disclosure at the time pre-sale
reports are issued is particularly important to investors, since such
reports provide them with important information prior to the point at
which they make an investment decision.\66\
---------------------------------------------------------------------------

    \65\ We intend the term ``preliminary credit rating'' to include
any rating, any range of ratings, or any other indications of a
rating used prior to the assignment of an initial credit rating for
a new issuance. See generally Credit Ratings Disclosure, SEC Release
No. 33-9070 (October 7, 2009) [74 FR 53086].
    \66\ We further note that Section 932 of the Act amends Section
15E of the Exchange Act to require a form to accompany the
publication of each credit rating that discloses certain
information. For the purposes of Section 943 and proposed Rule 17g-
7, such a form would clearly be a ``report'' and its publication
would therefore require the necessary disclosures regarding
representations, warranties and enforcement mechanisms available to
investors. The Commission has one year to adopt rules requiring
NRSROs to prescribe and use a form to make certain required
disclosures, whereas the Rule 17g-7 disclosures that we are
proposing in this release must be prescribed within 180 days from
the date of enactment of the Act. See Section 937 of the Act. Given
that Sections 932 and 943 both mandate rules requiring NRSROs to
disclose information, we solicit comment below on whether the
proposed Rule 17g-7 disclosure should eventually be scoped into
proposals we will issue under Section 932 regarding the disclosure
that would need to be made by an NRSRO in the form accompanying the
publication of each credit rating.
---------------------------------------------------------------------------

Request for Comment:

    31. The Act and our proposed new Rule 17g-7 require disclosure of
how the representations, warranties and enforcement mechanisms in a
particular deal differ from the representations, warranties and
enforcement mechanisms in the issuance of similar securities. We are
not specifying in this release a definition for the term ``similar
securities.'' Should we define ``similar securities''? If so, how
should it be defined? Should similar securities be defined by
underlying asset classes (i.e., residential mortgages, commercial
mortgages, auto loans, or auto leases, etc.)? Or should the distinction
be narrower (i.e., prime residential mortgages, Alt-A residential
mortgages, or subprime residential mortgages)? Or by sponsor
(Originator A or Originator B, etc.)? Or by other ABS rated by the same
NRSRO?
    32. Section 932 of the Act further amends the Exchange Act by
adding a new paragraph (s) to Section 15E requiring a form to accompany
the publication of each credit rating that discloses certain
information and requiring that we adopt rules requiring NRSROs to
prescribe and use such a form. Would it be appropriate to require the
inclusion of the disclosures about representations, warranties and
enforcement mechanisms required under proposed Rule 17g-7 in the form
used to make the disclosures that will be required under rules adopted
pursuant to Exchange Act Section 15E(s)? Are there any timing issues
that we should take into account in determining whether to do so?
    33. Should we require the proposed disclosure to include
comparisons to industry standards in addition to similar securities?
For instance, one organization has published model standards for
representation, warranties and enforcement mechanisms with respect to
residential mortgage backed securities.\67\ What would be an industry
standard for other asset classes?
---------------------------------------------------------------------------

    \67\ For example, the ASF has proposed model representations and
warranties designed to enhance the alignment of incentives of
mortgage originators with those of investors in mortgage loans. See
American Securitization Forum Press Release, ``ASF Proposes Risk
Retention and Issues Final RMBS Disclosure and Reporting Packages,''
July 15, 2009, available at http://www.americansecuritization.com/
story.aspx?&fnl;id=3460.
---------------------------------------------------------------------------

    34. Is there any reason not to consider an expected or preliminary
credit rating to be a ``credit rating'' for the purposes of the
proposed rule? If so, why?
    35. In the case of a registered ABS transaction, should we allow
NRSROs to satisfy the requirement to disclose representations,
warranties and enforcement mechanisms by referring to disclosure about
those matters that is included in a prospectus prepared by an issuer?
    36. Rule 17g-5, among other things, is designed to facilitate the
performance of unsolicited credit ratings for structured finance
products by providing a mechanism for NRSROs not hired by arrangers of
structured finance products to obtain the same information provided to
NRSROs hired by such arrangers to rate those products.\68\ As such,
non-hired NRSROs performing unsolicited credit ratings pursuant to the
Rule 17g-5 mechanism would have access to the same information on a
transaction's representations, warranties, and enforcement mechanisms
at the same time as hired NRSROs. However, in the event that a non-
hired NRSRO elected to perform an unsolicited credit rating not
pursuant to Rule 17g-5, it would likely not have access to such
information until it was made public. It is the Commission's
understanding that prior to the introduction of the Rule 17g-5
mechanism described above, NRSROs rarely, if ever, performed
unsolicited credit ratings for structured finance products. Given the
availability of the Rule 17g-5 mechanism, is it likely that any NRSROs
would perform unsolicited credit ratings for structured finance
products in the future without relying on that mechanism to obtain
information from securitizers? If so, would such NRSROs be able to
comply with proposed Rule 17g-7? Would it be appropriate for such
NRSROs to include an explanatory note accompanying the disclosures
required by proposed Rule 17g-7 indicating that such disclosures were
based only on publicly available information?
---------------------------------------------------------------------------

    \68\ See Amendments to Rules for Nationally Recognized
Statistical Rating Organizations, SEC Release 34-61050 (November 23,
2009), [74 FR 63832].
---------------------------------------------------------------------------

III. Transition Period

    We are considering the appropriate timing for compliance and
effectiveness of the proposals, if adopted, and request that
commentators provide input about feasible dates for implementation of
the proposed amendments. We currently anticipate that, if adopted, the
new and amended rules would apply to all securitizers and NRSROs
related to new issuances, including takedowns off of existing shelf
registration statements, of Exchange Act-ABS. However, we note that
Rule 15Ga-1, as proposed, would

require disclosures about the repurchase demands and repurchases and
replacements that occurred prior to the effective date of the new
requirements.

Request for Comment:

    37. Should implementation of any proposals be phased-in? If so,
explain why and describe the timeframe needed for a phase-in (e.g., six
months, one or two years) and basis for such period?
    38. Should implementation be based on a tiered approach that
relates to a characteristic such as the size of the securitizer? Is
there any reason to structure implementation around asset class of the
securities? Because a reporting structure is already available for
registered transactions, should prospectuses and periodic reports be
required to include the demand, repurchase and replacement disclosures,
as provided by our proposals to amend Items 1104 and Item 1121 of
Regulation AB, before Form ABS-15G is implemented?

IV. General Request for Comments

    We request comment on the specific issues we discuss in this
release, and on any other approaches or issues that we should consider
in connection with the proposed amendments. We seek comment from any
interested persons, including investors, securitizers, asset-backed
issuers, sponsors, originators, servicers, trustees, disseminators of
EDGAR data, industry analysts, EDGAR filing agents, and any other
members of the public.

V. Paperwork Reduction Act

A. Background

    Certain provisions of the proposed rule amendments contain
``collection of information'' requirements within the meaning of the
Paperwork Reduction Act of 1995 (PRA).\69\ The Commission is submitting
these proposed amendments and proposed rules to the Office of
Management and Budget (OMB) for review in accordance with the PRA.\70\
An agency may not conduct or sponsor, and a person is not required to
comply with, a collection of information unless it displays a currently
valid control number. The titles for the collections of information
are:\71\
---------------------------------------------------------------------------

    \69\ 44 U.S.C. 3501 et seq.
    \70\ 44 U.S.C. 3507(d) and 5 CFR 1320.11.
    \71\ The paperwork burden from Regulation S-K is imposed through
the forms that are subject to the requirements in those regulations
and is reflected in the analysis of those forms. To avoid a
Paperwork Reduction Act inventory reflecting duplicative burdens and
for administrative convenience, we assign a one-hour burden to
Regulation S-K.
---------------------------------------------------------------------------

    (1) ``Form ABS-15G'' (a proposed new collection of information);
    (2) ``Regulation S-K'' (OMB Control No. 3235-0071); and
    (3) ``Rule 17g-7'' (a proposed new collection of information).
    The regulation listed in No. 2 was adopted under the Securities Act
and the Exchange Act and sets forth the disclosure requirements for
registration statements and periodic and current reports filed with
respect to asset-backed securities and other types of securities to
inform investors.
    The regulations and forms listed in Nos. 1 and 3 are newly proposed
collections of information under the Act. Rule 15Ga-1 would require
securitizers to provide disclosure regarding all fulfilled and
unfulfilled repurchase requests with respect to Exchange Act-ABS
pursuant to the Act. Form ABS-15G would contain Rule 15Ga-1 disclosures
and be filed with the Commission. Rule 17g-7 would require NRSROs to
provide disclosure regarding representations, warranties, and
enforcement mechanisms available to investors in any report
accompanying a credit rating issued by an NRSRO in connection with an
Exchange Act-ABS transaction.
    Compliance with the proposed amendments would be mandatory.
Responses to the information collections would not be kept confidential
and there would be no mandatory retention period for proposed
collections of information.

B. PRA Reporting and Cost Burden Estimates

    Our PRA burden estimates for the proposed amendments are based on
information that we receive on entities assigned to Standard Industrial
Classification Code 6189, the code used with respect to asset-backed
securities, as well as information from outside data sources.\72\ When
possible, we base our estimates on an average of the data that we have
available for years 2004, 2005, 2006, 2007, 2008, and 2009.
---------------------------------------------------------------------------

    \72\ We rely on two outside sources of ABS issuance data. We use
the ABS issuance data from Asset-Backed Alert on the initial terms
of offerings, and we supplement that data with information from
Securities Data Corporation (SDC).
---------------------------------------------------------------------------

    In adopting rules under the Credit Rating Agency Reform Act of 2006
(``the Rating Agency Act''),\73\ as well as proposing additional rules
in November 2009, we estimated that approximately 30 credit rating
agencies would be registered as NRSROs.\74\
---------------------------------------------------------------------------

    \73\ Public Law 109-291 (2006).
    \74\ See e.g., Section VIII of Proposed Rules for Nationally
Recognized Statistical Rating Organizations, SEC Release 34-61051
(December 4, 2009) [74 FR 63866].
---------------------------------------------------------------------------

1. Form ABS-15G
    This new collection of information relates to proposed disclosure
requirements for securitizers that offer Exchange Act-ABS. Under the
proposed amendments, such securitizers would be required to disclose
demand, repurchase and replacement history with respect to pool assets
across all trusts aggregated by securitizer. The new information would
be required at the time a securitizer offers Exchange Act-ABS after the
implementation of the proposed rule, and then monthly, on an ongoing
basis as long as the securitizer has Exchange Act-ABS outstanding held
by non-affiliates. The disclosures would be filed on EDGAR on proposed
Form ABS-15G. We believe that the costs of implementation would include
costs of collecting the historical information, software costs, costs
of maintaining the required information, and costs of preparing and
filing the form. Although the proposed requirements apply to
securitizers, which by definition would include sponsors and issuers,
we base our estimates on the number of unique ABS sponsors because we
are also proposing that issuers affiliated with a sponsor would not
have to file a separate Form ABS-15G to provide the same proposed Rule
15Ga-1 disclosures. We base our estimates on the number of unique ABS
securitizers (i.e., sponsors) over 2004-2009, which was 540, for an
average of 90 unique securitizers per year.\75\ We base our burden
estimates for this collection of information on the assumption that
most of the costs of implementation would be incurred before the
securitizer files its first Form ABS-15G. Because ABS issuers currently
have access to systems that track the performance of the assets in a
pool we believe that securitizers should also have access to
information regarding whether an asset had been repurchase or replaced.
However, securitizers may not have historically collected the
information and systems may not currently be in place to track when a
demand has been made, \76\ and in particular, systems may not be in
place to track those demands made by investors upon trustees.
Therefore, securitizers would incur a one-time cost to compile
historical information in systems. Furthermore, the burden to collect
and compile the historical information may vary significantly between
securitizers, due

to the number of asset classes and number of ABS issued by a
securitizer.
---------------------------------------------------------------------------

    \75\ We base the number of unique sponsors on data from SDC.
    \76\ See e.g., comment letters from ASF, Bank of America,
Financial Services Roundtable and the Mortgage Bankers Association
on the 2010 ABS Proposing Release.
---------------------------------------------------------------------------

    We estimate that a securitizer would incur a one-time setup cost
for the initial filing of 972 hours to collect and compile historical
information and adjust its existing systems to collect and provide the
required information going forward.\77\ Therefore, we estimate that it
would take a total of 87,480 hours for a securitizer to set up the
mechanisms to file the initial Rule 15Ga-1 disclosures.\78\ We allocate
75% of these hours (65,610 hours) to internal burden for all
securitizers. For the remaining 25% of these hours (21,870 hours), we
use an estimate of $400 per hour for external costs for retaining
outside professionals totaling $8,748,000.
---------------------------------------------------------------------------

    \77\ The value of 972 hours for setup costs is based on staff
experience. We estimate that 672 of those hours will be to set up
systems to track the information and is calculated using an estimate
of two computer programmers for two months, which equals 21 days per
month times two employees times two months times eight hours per
day.
    \78\ 972 hours to adjust existing systems per securitizer X 90
average number of unique securitizers.
---------------------------------------------------------------------------

    After a securitizer has made the necessary adjustments to its
systems in connection with the proposed rule and, after an initial
filing of Form ABS-15G disclosures has been made, we estimate that each
subsequent filing of Form ABS-15G to disclose ongoing information by a
securitizer will take approximately 30 hours to prepare, review and
file. We estimate, for PRA purposes, that the number of Form ABS-15G
filings per year will be 1,620.\79\
---------------------------------------------------------------------------

    \79\ The Form ABS-15G is required to be filed on a monthly
basis; however, we are estimating that, in the first year after
implementation, the number of Form ABS-15G per year would be a
multiple of six times the number of unique securitizers per year
since the obligation to initially file Form ABS-15G is an offering
of Exchange Act-ABS, which could happen at any time of the year.
Therefore, in the first year of implementation, a securitizer would
most likely not be obligated to file Form ABS-15G for the full 12
months. Thus, we estimate the total number of Form ABS-15G to be
filed in the first year after implementation to be 540 (90 unique
securitizers year one x 6).
    In the second year after implementation, we estimate the number
of Form ABS-15G to be filed will be 1080 for a total of 1,620 (90
unique securitizers year one x 12) + (90 unique securitizers year
two x 6). In the third year after implementation, we estimate the
number of Form ABS-15G to be filed will be 2,160 for a total of
2,700 (90 unique securitizers year one x 12) + (90 unique
securitizers year two x 12) + (90 unique securitizers year three X
6). The total number of Forms 15G-ABS over three years, would
therefore be 4,860. Therefore, for PRA purposes, we estimate an
annual average of 1,620 Form ABS-15G filings.
---------------------------------------------------------------------------

    Therefore, after the initial filing is made, we estimate the total
annual burden hours for preparing and filing the disclosure will be
48,600 hours.\80\ We allocate 75% of those hours (36,450 hours) to
internal burden hours for all securitizers and 25% of those hours
(12,150 hours) for professional costs totaling $400 per hour of
external costs of retaining outside professionals totaling $4,860,000.
Therefore, the total internal burden hours are 102,060 \81\ and the
total external costs are $13,608,000.\82\
---------------------------------------------------------------------------

    \80\ 30 hours x 1,620 forms.
    \81\ 65,610 hours + 36,450 hours.
    \82\ $8,748,000 + $4,860,000.
---------------------------------------------------------------------------

2. Rule 15Ga-1
    Rule 15Ga-1 contains the requirements for disclosure that a
securitizer must provide in Form15G-ABS filings described above. The
collection of information requirements, however, are reflected in the
burden hours estimated for Form ABS-15G, therefore, Rule 15Ga-1 does
not impose any separate burden. Therefore, we have not included
additional burdens for proposed Rule 15Ga-1.
3. Forms S-1 and S-3
    We are proposing that asset-backed securities offered on Forms S-1
and S-3 include the required Rule 15Ga-1 disclosures for the same asset
class in registration statements. The burden for the collection of
information is reflected in the burden hours for Form ABS-15G filed by
a securitizer; however, Forms S-1 and S-3 are filed by asset-backed
issuers, and issuers may include only a portion of the information in
the prospectus. Therefore, we have not included additional burdens for
Forms S-1 and S-3.
4. Form 10-D
    In 2004, we adopted Form 10-D as a new form limited to asset-backed
issuers. This form is filed within 15 days of each required
distribution date on the asset-backed securities, as specified in the
governing documents for such securities. The form contains periodic
distribution and pool performance information.
    We are proposing that issuers of registered ABS include the
proposed Rule 15Ga-1 disclosures for only the pool assets on Form 10-D.
However, because the burden for the collection of information is
reflected in the burden hours for Form ABS-15G, we have not included
additional burdens for Form 10-D.
5. Regulation S-K
    Regulation S-K, which includes the item requirements in Regulation
AB, contains the requirements for disclosure that an issuer must
provide in filings under both the Securities Act and the Exchange Act.
In 2004, we noted that the collection of information requirements
associated with Regulation S-K as it applies to ABS issuers are
included in Form S-1, Form S-3, Form 10-K and Form 8-K. We have
retained an estimate of one burden hour to Regulation S-K for
administrative convenience to reflect that the changes to the
regulation did not impose a direct burden on companies.\83\
---------------------------------------------------------------------------

    \83\ See the 2004 ABS Adopting Release.
---------------------------------------------------------------------------

    The proposed changes would make revisions to Regulation S-K. The
collection of information requirements, however, are reflected in the
burden hours estimated for the various Securities Act and Exchange Act
forms related to ABS issuers. The rules in Regulation S-K do not impose
any separate burden. Consistent with historical practice, we have
retained an estimate of one burden hour to Regulation S-K for
administrative convenience.
6. Rule 17g-7
    This new collection of information relates to proposed disclosure
requirements for NRSROs. Under the proposed amendments, an NRSRO would
be required to disclose in any report accompanying a credit rating the
representations, warranties and enforcement mechanisms available to
investors and describe how they differ from those in issuances of
similar securities. We believe that the costs of implementation would
include the cost of preparing the report and maintaining the
information. In addition, it is our understanding that the disclosures
and drafts of transaction agreements that contain the representations,
warranties and enforcement mechanisms related to an ABS transaction are
prepared by the issuer and made available to NRSROs during the rating
process. We estimate it would take 1 hour per ABS transaction to review
the relevant disclosures prepared by an issuer, which an NRSRO would
presumably have reviewed as part of the rating process, and convert
those disclosures into a format suitable for inclusion in any report to
be issued by an NRSRO. The proposed rule would also require an NRSRO to
include disclosures describing how the representations, warranties and
enforcement mechanisms differ from those provided in similar
securities. Although we are not prescribing how an NRSRO must fulfill
this requirement, we anticipate that one way an NRSRO could do so would
be to review previous issuances both on an initial and an ongoing basis
in order to establish ``benchmarks'' for

various types of securities and revise them as appropriate. We expect
that an NRSRO would incur an initial setup cost to collect, maintain
and analyze previous issuances to establish benchmarks as well as an
ongoing cost to review the benchmarks to ensure that they remain
appropriate. We estimate that the initial review and set up system cost
will take 100 hours and that NRSROs will spend an additional 100 hours
per year revising the various benchmarks. Therefore, we estimate it
would take a total of 3,000 hours \84\ for NRSROs to set up systems and
an additional 3,000 hours per year revising various benchmarks.\85\
---------------------------------------------------------------------------

    \84\ 100 hours x 30 NRSROs.
    \85\ 100 hours x 30 NRSROs.
---------------------------------------------------------------------------

    On a deal-by-deal basis, we estimate it would take an NRSRO 10
hours per ABS transaction to compare the terms of the current deal to
those of similar securities. Because NRSROs would need to provide the
disclosures in connection with the issuance of a credit rating on a
particular offering of ABS, we base our estimates on an annual average
of 2,067 ABS offerings.\86\ Typically, the terms of the transaction
agreements condition the issuance of an ABS on a credit rating, and
generally, two credit ratings are required, resulting in the hiring of
two NRSROs per transaction, although some may only require one credit
rating and thus the hiring of one NRSRO. However, we anticipate that
our recent amendments to Rule 17g-5, which provide a mechanism for
allowing non-hired NRSROs to obtain the same information provided to
NRSROs hired to rate structured finance transactions, will promote the
issuance of credit ratings by NRSROs that are not hired by the
arranger.\87\ As a result, we assign 4 to the number of credit ratings
per issuance of ABS, based on an average of two NRSROs preparing two
reports (pre-sale and final) for each transaction. Therefore, we
estimate that it would take a total of 90,948 hours, annually, for
NRSROs to provide the proposed Rule 17g-7 disclosures.\88\
---------------------------------------------------------------------------

    \86\ The annual average number of registered offerings was 958
and the annual average number of Rule 144A ABS offerings was 716 for
an estimated annual average of 1,674 over the period 2004-2009. See
Section X. of the 2010 ABS Proposing Release. We also add 393 to
estimate for offerings under other exemptions that were not within
the scope of the 2010 ABS Proposing Release. Thus, in total we use
an estimated annual average number of 2,067 ABS offerings for the
basis of our PRA burden estimates.
    \87\ See Amendments to Rules for Nationally Recognized
Statistical Rating Organizations, SEC Release 34-61050 (November 23,
2009), [74 FR 63832].
    \88\ 4 reports x 2,067 ABS offerings x 11 hours (1 hour to
review disclosures + 10 hours to compare and prepare).
---------------------------------------------------------------------------

7. Summary of Proposed Changes to Annual Burden Compliance in
Collection of Information
    Table 1 illustrates the annual compliance burden of the collection
of information in hours and costs for the new proposed disclosure
requirements for securitizers and NRSROs. Below, the proposed Rule
15Ga-1 requirement for securitizers is noted as ``Form ABS-15G'' and
the proposed requirement for NRSROs is noted as ``17g-7.''

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                             Decrease or                                    Decrease or
                                        Current      Proposed     Current    increase in     Proposed         Current       increase in      Proposed
                Form                     annual       annual       burden       burden     burden  hours   professional    professional    professional
                                       responses    responses      hours        hours                          costs           costs           costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Form ABS-15G........................  ...........        1,620  ...........      102,060         102,060  ..............      13,608,000      13,608,000
17g-7...............................  ...........        8,268  ...........       96,948          96,948  ..............  ..............  ..............
--------------------------------------------------------------------------------------------------------------------------------------------------------

8. Solicitation of Comments
    We request comments in order to evaluate: (1) Whether the proposed
collection of information is necessary for the proper performance of
the functions of the agency, including whether the information would
have practical utility; (2) the accuracy of our estimate of the burden
of the proposed collection of information; (3) whether there are ways
to enhance the quality, utility, and clarity of the information to be
collected; and (4) whether there are ways to minimize the burden of the
collection of information on those who are to respond, including
through the use of automated collection techniques or other forms of
information technology.\89\ In addition, we specifically ask whether it
is appropriate to assume, as we have, that for the purposes of
preparing the required disclosures describing how the representations,
warranties and enforcement mechanisms differ from those provided in
similar securities NRSROs would review previous issuances both on an
initial and an ongoing basis in order to establish ``benchmarks'' for
various types of securities and revise them as appropriate? Would
NRSROs use other means to prepare the required comparisons, for
example, reviewing previous issuances on a de novo basis for every ABS
transaction?
---------------------------------------------------------------------------

    \89\ We request comment pursuant to 44 U.S.C. 3506(c)(2)(B).
---------------------------------------------------------------------------

    Any member of the public may direct to us any comments concerning
the accuracy of these burden estimates and any suggestions for reducing
these burdens. Persons submitting comments on the collection of
information requirements should direct the comments to the Office of
Management and Budget, Attention: Desk Officer for the Securities and
Exchange Commission, Office of Information and Regulatory Affairs,
Washington, DC 20503, and should send a copy to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090, with reference to File No. S7-24-10.
Requests for materials submitted to OMB by the Commission with regard
to these collections of information should be in writing, refer to File
No. S7-24-10, and be submitted to the Securities and Exchange
Commission, Office of Investor Education and Advocacy, 100 F Street,
NE., Washington, DC 20549. OMB is required to make a decision
concerning the collection of information between 30 and 60 days after
publication of this release. Consequently, a comment to OMB is best
assured of having its full effect if OMB receives it within 30 days of
publication.

VI. Benefit-Cost Analysis

    The Act requires us to implement the requirements discussed in this
release. These changes will affect all securitizers of Exchange Act-
ABS, including unregistered Exchange Act-ABS, and NRSROs that provide
credit ratings on Exchange Act-ABS. Further, the proposed rules would
also require historical information with respect to Exchange Act-ABS
issued by a securitizer. We also re-propose disclosure requirements
with respect to repurchase requests in Regulation AB in order to
conform disclosures that we previously proposed under our 2010 ABS
Proposals to those required by Section 943 of the Act.

    We are sensitive to benefits and costs of the proposed rules, if
adopted. We discuss these benefits and costs below. We request that
commentators provide their views along with supporting data as to the
benefits and costs of the proposed amendments.

A. Benefits

    The proposals seek to fulfill the Act's objective to provide
greater transparency regarding the use of representations and
warranties in ABS transactions in both the registered and unregistered
ABS markets. The recent financial crisis has revealed various problems
with existing representation, warranty and enforcement provisions. Poor
underwriting standards coupled with unenforceable representations and
warranties by securitizers exacerbated investors' losses in ABS.\90\
Increasing transparency regarding all demands for repurchases and
replacements, including investor demands upon a trustee, will help
investors and market participants identify originators with clear
underwriting deficiencies. By having better information to judge the
origination and underwriting quality of the assets that were previously
securitized, investors can make more informed investment decisions.
---------------------------------------------------------------------------

    \90\ See, e.g., N. Timiaros and Aparajita Saha-Bubna ``Banks
Face Fight Over Mortgage Loan Buybacks,'' Wall Street Journal (Aug.
18, 2010); and Alistair Barr, ``Loan repurchases are a $10 billion
problem for big banks,'' (Feb. 3, 2010) available at http://
www.marketwatch.com/story/banks-10-billion-problem-loan-repurchases-
2010-02-03.
---------------------------------------------------------------------------

    The proposals may strengthen the incentives for securitizers to
improve origination and underwriting standards and to refrain from
securitizing assets that do not meet stated representations. In
addition, following a securitization, securitizers may have stronger
incentives to fulfill repurchase and replacement demands properly. We
also propose to limit the scope of the disclosures to outstanding
Exchange Act-ABS, and in the initial filing to the last five years of
demand, repurchase and replacement history in order to ameliorate costs
to securitizers, and still provide information so that investors may
identify originators with underwriting deficiencies.
    We are proposing to require that the disclosures be filed on EDGAR
on new Form ABS-15G. By requiring the proposed Form ABS-15G to be filed
on EDGAR, the information proposed to be required would be housed in a
central repository that would preserve continuous access to the
information. After the initial filing, securitizers would be required
to file Form ABS-15G, periodically, on a monthly basis with updated
information, so that consistent with the purpose of Section 943 of the
Act, an investor may monitor the demand, repurchase and replacement
activity across all Exchange Act-ABS issued by a securitizer.
    If an ABS is rated, the proposals would require more disclosures by
NRSROs about the representations, warranties and enforcement mechanisms
available to investors, and how they differ from those of other similar
securities. The proposed disclosures will enhance the comparability of
information across issuers in a relatively efficient manner by
centralizing this disclosure in NRSRO reports. As a result, these
disclosures will possibly expand the information available to investors
and improve transparency regarding the use of representations and
warranties in ABS transactions.
    As a result, proposed Rules 15Ga-1 and 17g-7 disclosures are likely
to help investors more accurately evaluate and price initial offerings
and existing issues of ABS securities and in turn, are likely to
improve capital allocation in both the markets for ABS and the original
loan markets that back those ABS. Further, the proposed rules would
require disclosures regarding the registered and unregistered
transactions, thus extending the benefits of disclosure to the
unregistered market. While it is difficult to quantify the benefits
listed above, they are likely to be substantial in light of the recent
financial crisis.

B. Costs

    The proposals would implement the Act's requirement on securitizers
to disclose the repurchase and replacement demands resulting from
breaches of representations and warranties in past ABS transactions
initially, for the last five years and then updated disclosures going
forward on a monthly basis. We understand that some of the data
collection may be costly. In some cases, it may be very difficult to
obtain repurchase or replacement records from the distant past.\91\
However, we believe that the information about whether an asset had
been repurchased or replaced from recent years should be accessible by
issuers of outstanding ABS, because the current servicing history of
the underlying assets would still be accessible on servicers' systems.
However, systems may not currently be in place to track when a demand
has been made and therefore, securitizers may incur a significant one-
time cost to collect and compile historical information and that cost
may vary substantially between securitizers, due to the number of asset
classes and number of ABS issued by a securitizer. In addition to the
costs on a securitizer, trustees would also incur costs of tracking
investor demands upon the trustee. We also expect that the cost of
compiling and reporting this information would require a one-time set-
up cost to adjust existing systems to compile the initial historical
information. Additionally, under the proposal, the securitizer would
incur additional costs to satisfy the obligation to file ongoing
monthly reports on EDGAR of repurchase demand and repurchase and
replacement activity. Filing on EDGAR would require a securitizer to
obtain authorization codes and to adhere to formatting instructions.
The Act does not specify the periodicity with which information should
be provided so that investors may identify originators with clear
underwriting deficiencies. However, we believe that monthly reporting
would provide a better picture of repurchase activity and a shorter
interval might be too burdensome. Also, many ABS pay distributions to
investors monthly and likewise, the related transaction agreements,
including in unregistered transactions, typically provide for monthly
reporting to investors. Therefore, because most securitizers would most
likely be accustomed to preparing and providing monthly disclosures, we
anticipate that it may be less costly than providing the disclosures at
any other interval. However, any securitizers that do not make payments
or provide reporting on a monthly basis may find it costlier to prepare
the proposed disclosures.
---------------------------------------------------------------------------

    \91\ See discussion in Section II.A. 3.
---------------------------------------------------------------------------

    Indirectly, as we discussed in the 2010 ABS Proposing Release,
disclosures about an originator's or a sponsor's refusal to repurchase
or replace assets put back to them for breach of representations and
warranties might create incentives for originators to agree to
repurchase or replace such assets even in cases where these assets were
not clearly in breach. If investors regard such disclosures as
indicative of a willingness to comply with representations and
warranties in the future, then originators or sponsors might try to
preserve their reputation by taking back assets even when they do not
have an obligation to do so. This might create an incentive for
sponsors and possibly trustees to ask for repurchase or replacement of
poorly performing assets that represent no breach of representations
and

warranties.\92\ However, securitizers may devise other disclosures and
mechanisms to solve such problems in the long run, if they occur.
---------------------------------------------------------------------------

    \92\ See Section XI.C.2. of the 2010 ABS Proposing Release.
However, in certain situations, it may have the opposite effect,
where the threat of such a disclosure requirement relating to an
originator could induce a sponsor to be more reticent in pursuing
repurchase claims where the originator may be affiliated with the
sponsor. A sponsor may also be worried that a large number of
successful repurchase claims could indicate that its initial due
diligence, or the originator's loan quality, was poor. See letter
from Commonwealth of Massachusetts Attorney General in response to
the 2010 ABS Proposing Release.
---------------------------------------------------------------------------