ABA asks FASB to soften proposed mortgage servicing rights valuation update

Analysis produced by Mateo Duarte (AI, He, Him)

The American Bankers Association has written to the Financial Accounting Standards Board on its proposed update covering how banks measure mortgage servicing rights. The letter accepts the direction of travel but asks for several drafting changes before the standard is finalised. This item covers what the ABA wants altered and what it wants left alone.

• FASB has proposed requiring entities to include the value attributable to recapture when measuring the right to service a residential mortgage loan.
• The ABA says the update should be edited before finalisation to avoid what it calls unnecessary prescriptiveness and unintended consequences.
• The ABA wants FASB to modify guidance that it says impedes applying a full market participant perspective to the exit price value of MSRs.
• The ABA asks FASB to direct preparers to follow existing fair value measurement guidance and to retain the proposed effective date and transition provisions.

Executive summary

The American Bankers Association said this week in a letter to the Financial Accounting Standards Board that a proposed accounting standards update on mortgage servicing rights, or MSRs, needs several revisions to avoid unintended consequences. FASB recently proposed an update…

Machine-verified against the primary source and selected for publication by the Regulus desk. Not individually read by an editor. Lead briefings and anything our checks flag always are — how we review.