Fitch Ratings said that uncertainty surrounding the Dodd-Frank Act, particularly in terms of the qualified residential mortgage (QRM) definition, has led many traditional RMBS issuers to postpone their issuance plans.

This proposed regulation comprises both a risk-retention portion and the concept of premium capture reserve account. Deals backed solely by QRMs will be exempt from the risk-retention requirement. Thus potential RMBS issuers who do not want to create securities outside the QRM box are waiting to come to market with deals. This is why the final definition is significant, the rating agency said. Additionally, the proposed premium capture reserve account can result in valuation and accounting challenges and slow the flow of securitized transactions.

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