FASB issues proposals concerning collateralized mortgage loans
19 Jul 2013
The FASB has issued a proposed Accounting Standards Update (ASU), which seeks to clarify the determination of the time at which a creditor is considered to have received physical possession of the collateralized real estate property in an in substance repossession or foreclosure of a consumer mortgage loan and thus should recognize the real estate property and derecognize the loan.
The main provisions in this proposed ASU are as follows:
- Clarifies when a creditor is considered to have received physical possession of residential real estate property.
- Requires “an entity that receives physical possession of residential real estate property collateralizing a consumer mortgage loan disclose a roll-forward schedule reconciling the change from the beginning to the ending balance of such foreclosed properties at every reporting period.”
- Requires the disclosure of “the recorded investment in consumer mortgage loans secured by residential real estate properties that are in the process of foreclosure according to local requirements of the applicable jurisdiction.”
Currently, IFRS does not contain any guidance on the reclassification of collateralized mortgage loans to foreclosed residential real estate property.
The proposed ASU has a comment deadline of 17 September 2013.
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