Item 1122, titled Report on Assessment of Compliance With Servicing Criteria [for asset-backed securities] and Accountant's Attestation, also commonly called "section 1122 or Item 1122" by many in the industry, consists of a number of activities that must be undertaken by servicers for ensuring they meet compliance for Regulation AB. Item 1122 should not be regarded as a simple, stand alone process; rather it is a multi-faceted, collaborative effort by servicers that yields a number of deliverables throughout various stages of the 1122 roadmap to compliance. Because of the sheer growth of asset backed securities, the Securities and Exchange Commission (SEC) clearly recognized the important role servicer's play, stating that "...one of the most important elements affecting an investor's assessment of a particular asset-backed security is the performance of the servicer..." (1)
Item 1122 puts forth a number of requirements that must be undertaken and achieved, culminating with two deliverables that are to be included with Form 10-K filings. These two deliverables, one a collection of statements and a brief assessment, the other, an actual attestation report, are collectively known as Form 10-K Report(s) on Assessments of Compliance with Servicing Criteria and Accountant's Attestation. These two reports should be looked upon as the final deliverables in the overall Item 1122 roadmap to compliance for servicers.
(1) Securities and Exchange Commission 17 CFR Parts 210, 228, et al. Asset Backed Securities: Final Rule