The new risk retention requirements mandated by Congress in the Dodd-Frank Wall Street Reform and Consumer Protection Act contain a number of provisions intended to address problems created when loans are bundled into mortgage-backed securities and sold to investors.

This week, the Federal Reserve Board proposed a rule that would require sponsors of asset-backed securities (ABS) to retain at least five percent of the credit risk of the assets underlying the securities.

However, some analysts believe the rule could leave borrowers who are unable to put at least 20 percent down on a home purchase paying higher fees and interest rates.

All corners of home finance are expected to offer their opinions on what mortgages should be exempt from risk retention requirements and “qualified residential mortgages.”