SEC Loan Commitment Guidance Expected Soon

The Securities and Exchange Commission is expected to provide guidance soon on how it intends to deal with the issue of accounting for loan commitments."Guidance will be coming out, and it will be timely," SEC spokesman John Heine said. The SEC stirred up a hornet's nest back in December when it announced plans to issue a staff accounting bulletin that would require mortgage lenders to recognize loan commitments as "liabilities only" after March 31. Since then, the American Bankers Association, the Mortgage Bankers Association, and others have been urging the SEC to reconsider its position -- either to defer the issue to the Financial Accounting Standards Board or to issue a proposed staff accounting bulletin for public comment. The SEC's staff position on loan commitments "represents a dramatic change, and would have a significant impact on banks, but could also have an impact on the pricing of mortgage loans," the ABA says in a Feb. 10 letter to the SEC's chief accountant.