FASB Nears MSR Mark-to-Market Standard

The Financial Accounting Standards Board is very close to issuing a new standard that will simplify hedge accounting for mortgage servicing rights.The board is expected to issue the standard, which will allow servicers to mark MSRs to market, before the end of March. Servicers can continue to use the lower of cost or market (LOCOM) approach. But servicers who elect to use fair-value accounting will be able to mark to market MSRs and their derivative hedging instruments without going through all the hoops of Financial Accounting Standard 133 that require documentation of hedging strategies and hedge effectiveness. The Mortgage Bankers Association has asked the board to issue the new accounting standard as soon as possible. "We are pleased with the way FASB has handled the issue, and we are very much looking forward to release of the final statement," MBA senior director Alison Utermohlen said. The MBA also supports a FASB project that would allow lenders to mark to market loans that are held for sale for 60-90 days. FASB has released an exposure draft, and the comment period ends April 10.