The nation's five financial services regulatory agencies have issued an advisory stressing that commitments to originate loans that will be held for resale are derivatives and must be accounted for properly under accounting rule FAS 133.The advisory -- issued by the Office of the Comptroller of the Currency, the Federal Reserve Board, the Federal Deposit Insurance Corp., the National Credit Union Administration, and the Office of Thrift Supervision -- notes that some lenders are not following "the appropriate accounting and reporting for commitments to originate mortgages loans that will be held for resale." The advisory also addresses loan sale agreements and whether these contracts can be considered derivatives under certain conditions. (See the May 9 issue of National Mortgage News for more details.)
