FASB to Eye B&C MBS Loan Restructurings

The Financial Accounting Standard Board has scheduled a closed-door meeting for June 22 to discuss restructurings of troubled subprime mortgages that are in mortgage-backed securities.Mortgage industry groups and federal banking regulators are urging FASB to give servicers the latitude under its accounting rules to conduct restructurings and loan workouts when a loan is in default or default is reasonably foreseeable. The Mortgage Bankers Association has asked FASB to review its position that a servicer can be pro-active and initiate contact with a borrower who is expected to get into trouble when their loan resets. "A decision to restructure would not be made until the borrower confirms they will be unable to make mortgage payments and they provide evidence to their assertion," according to the MBA position paper. Representatives from the federal banking agencies, Securities and Exchange Commission, Internal Revenue Service, big four accounting firms and mortgage industry are invited to the June 22 FASB meeting.