FASB proposes update to residential mortgage servicing rights guidance

FASB is seeking feedback on a proposed ASU to address stakeholder concerns about accounting guidance on residential mortgage servicing rights.

A residential mortgage servicing right, according to a news release, represents the contractual right to service an underlying residential mortgage loan.

The proposed amendments require an entity to include the effects of recapture when measuring a residential mortgage servicing right by specifying that an entity must value all rights and obligations associated with a residential mortgage servicing contract, including recapture, in accordance with Topic 820, Fair Value Measurement.

Recapture refers to a mortgage servicer’s ability to solicit a borrower to refinance an existing mortgage loan and retain the servicing rights on the new loan. FASB will accept public feedback on the proposed ASU through Monday, Nov. 9. Learn more.