Irwin Changing Treatment of ISFs

Irwin Financial Corp., a mortgage banker and home equity lender based in Columbus, Ind., has announced that it will correct its accounting treatment of incentive servicing fees, which will henceforth be regarded as servicing assets rather than derivative instruments.Irwin said that, under its ISF contracts, it receives cash payments from buyers of certain home equity loans if its servicing of the sold loans meets specific performance targets. The company has been accounting for ISFs as derivative instruments under Statement of Financial Accounting Standards No. 133. "However, upon further consideration of the nature of incentive servicing fees and additional interpretive input, the corporation believes ISFs should be treated as servicing assets under SFAS 140," Irwin said. The company can be found online at http://www.irwinfinancial.com.