Summary:
Currently, a mortgage related security is defined as a security that is rated in one of the two highest rating categories by at least one nationally recognized statistical rating organization (NRSRO), while a small business related security is defined as a security that is rated in one of the four highest rating categories by at least one NRSRO. The Dodd-Frank Act requires agencies to adopted new standards of creditworthiness that do not rely on NRSRO credit ratings. The proposal is a transitional interpretation with respect to the definitions of "mortgage related security" and "small business related security." The SEC also is seeking comment on potential standards of creditworthiness that could be established to replace the use of NRSRO credit ratings in the definitions of the terms "mortgage related security" and "small business related security."