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FASB issues proposals on residential mortgage loans

  • FASB (US Financial Accounting Standards Board) Image

Jan 17, 2014

The FASB has released for public comment proposed Accounting Standards Update (ASU), “Classification of Certain Government-Guaranteed Residential Mortgage Loans Upon Foreclosure.”

The proposed ASU would amend the guidance in ASC 310-40 by requiring a “residential mortgage loan be derecognized and that a separate other receivable be recognized upon foreclosure if the loan has both of the following characteristics:

    1. The loan has a government guarantee that is not separable from the loan before foreclosure entitling the creditor to the full unpaid principal balance of the loan.
    2. At the time of foreclosure, the creditor has the intent to make a claim on the guarantee and the ability to recover the full unpaid principal balance of the loan through the guarantee.

Upon foreclosure, the separate other receivable would be measured based on the current amount of the loan balance expected to be recovered under the guarantee.”

Comments are requested by April 30, 2014.

For more information, see Deloitte's Accounting Journal Entry and the proposed ASU on the FASB’s Web site.

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