Standard risk retention.

CFR · 2024-01-01 · US · Title 12

(a) (1) If the sponsor retains only an eligible vertical interest as its required risk retention, the sponsor must retain an eligible vertical interest in a percentage of not less than 5 percent. (2) If the sponsor retains only an eligible horizontal residual interest as its required risk retention, the amount of the interest must equal at least 5 percent of the fair value of all ABS interests in the issuing entity issued as a part of the securitization transaction, determined using a fair value measurement framework under GAAP. (3) If the sponsor retains both an eligible vertical interest and an eligible horizontal residual interest as its required risk retention, the percentage of the fair value of the eligible horizontal residual interest and the percentage of the eligible vertical interest must equal at least five. (4) The percentage of the eligible vertical interest, eligible horizontal residual interest, or combination thereof retained by the sponsor must be determined as of the closing date of the securitization transaction. (b) (1) The account is held by the trustee (or person performing similar functions) in the name and for the benefit of the issuing entity; (2) Amounts in the account are invested only in cash and cash equivalents; and (3) Until all ABS interests in the issuing entity are paid in full, or the issuing entity is dissolved: (i) Amounts in the account shall be released only to: (A) Satisfy payments on ABS interests in the issuing entity on any payment d

official document · source cfr-2024 · id 12:§ 1234.4