FDIC OKs MSR Capital Rule

The Federal Deposit Insurance Corp. has approved a final rule that raises the Tier 1 capital limit on mortgage servicing rights from 50% to 100%.Other federal banking and thrift regulators will follow shortly, and the agencies plan to publish the joint rule in the Federal Register before the end of July. The effective date of the long-awaited rule is Oct. 1. However, banks can elect to implement the high capital limit on the day the rule is published in the Federal Register. A few institutions have bumped up against the 50% capital limit, and the early effective date will provide relief from having to deduct excess MSRs from Tier 1 capital. The final rule maintains the current practice of requiring institutions to take a 10% haircut when valuing mortgage servicing assets for capital purposes.