A proposed accounting standards update on mortgage servicing rights, or MSRs, needs several revisions to avoid unintended consequences, the American Bankers Association said this week in a letter to the Financial Accounting Standards Board.
FASB recently proposed an update to specify that entities should include the value attributable to recapture when measuring the right to service a residential mortgage loan. In its letter, ABA said that to avoid “unnecessary prescriptiveness,” FASB should make several edits to the update before finalizing it.
Proposed revisions include modifying guidance that impedes the ability of preparers to fully apply a market participant perspective to the exit price value of MSRs, directing preparers to follow existing guidance on fair value measurement in valuing MSRs, and retaining the update’s proposed effective date and transition provisions.
