The SEC has proposed requiring the sponsors of asset backed securities (RMBS) to keep some “skin in the game” or in other words, retain some of the risk on mortgages that are pooled together and sold as securities to investors. The idea is that by keeping some of the risk, the sponsors have something to lose and are more likely to make responsible loans, minimizing predatory lending experienced by consumers and increasing the quality of the assets sold to investors. Read our comments on this proposal below. We also comment on the importance of making certain information available to investors, regulators and the public concerning the quality of the underwriting of loans included in RMBS pools and caution the SEC to carefully balance the need for this information against consumer privacy concerns.

Download the document: http://www.defendyourdollars.org/CU_SEC_S7-08-10.pdf