Besides imposing a 5% risk retention requirement on securitizations by banks, the Federal Deposit Insurance Corp. (FDIC) also spelled out new standards that are particularly tough and aimed solely at issuers of RMBS.

Effective Jan. 1, FDIC will require bank issuers to establish a one-year reserve fund of at least 5% of the cash proceeds on residential MBS transactions to cover repurchase demands for breaches of representations and warranties.

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