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DS News Webcast: Friday 10/24/2014

The residential mortgage loan risk retention rule, known as the qualified residential mortgage rule, was approved on Wednesday the U.S. Federal Reserve Board and the Securities and Exchange Commission, the last two of six federal agencies to approve the rule, according to the Fed. The rule, which was first proposed in 2011, requires the lenders to retain at least 5 percent of a loan's risk when packing mortgages to sell to investors in the secondary market.

The Fed, the U.S. Department of Housing and Urban Development, the Federal Deposit Insurance Corporation, the Federal Housing Finance Agency, the Office of the Comptroller of the Currency, and the SEC are all issuing the final rule jointly. The risk retention framework in the proposal the agencies issued in August 2013 is largely retained in the final rule. The sponsors of asset-based securities are generally required to retain at least 5 percent of the credit risk of the assets collateralizing ABS insurance, and the rule prohibits the sponsor from transferring or hedging the credit risk.

In Dallas, insurance claims management firm Dimont & Associates announced it is once again operating as an independent company, ending its affiliation with Wingspan Portfolio Holdings. According to the company's announcement, Dimont's break is the result of recapitalization from existing institutional investors, including THL Credit, Inc. Dimont's announcement comes nearly a year and a half after Wingspan acquired the company as a wholly owned subsidiary.

About Author: Jordan Funderburk

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