Six federal agencies approved a 4-week extension of the comment period for the proposed rule under the Dodd-Frank Act that requires asset-backed securities issuers to maintain at least 5 percent of the credit risk of the underlying assets.

The comment period was extended “to allow interested persons more time to analyze the issues and prepare their comments,” the agencies said in a joint statement. Under the proposed rule, issuers would also not be allowed to transfer or hedge the credit risk.

So far, 38 letters have been received on the proposed rule. Some commenters have asked for further definitions of terms so that comment letters can be better informed. For example, the Securities Industry and Financial Markets Association's managing director and head of securitization Richard Dorfman asked in a letter from April 21 that the agencies publish an explanation of “par value,” arguing that “such a clarification would greatly enhance the likelihood that the comments received by the Agencies on the proposed rules are useful to the Agencies in crafting final rules that will implement the intent of the Congress as expressed in the ‘skin in the game' provisions of the Dodd-Frank Act.”

The Securities and Exchange Commission, the Office of the Comptroller of the Currency, the Federal Reserve, the Federal Deposit Insurance Corporation, the Federal Housing Finance Agency, and the Department of Housing and Urban Development will now accept letters through August 1. The deadline was originally set for June 10.

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