EITF Issue 13-E sought to define 'in substance repossession or foreclosure' because of the diversity in practice regarding when entities were reclassifying loans receivable to other real estate owned (OREO) (instead of as a loan receivable). The timing of loan reclassifications to OREO may be qualitatively significant to regulators and other financial statement users. 'In substance repossession or foreclosure' is clarified by the ASU:

A creditor is considered to have received physical possession (resulting from an in substance repossession or foreclosure) of residential real estate property collateralizing a consumer mortgage loan only upon the occurrence of either of the following:

a. The creditor obtains legal title to the residential real estate property upon completion of a foreclosure. A creditor may obtain legal title to the residential real estate property even if the borrower has redemption rights that provide the borrower with a legal right for a period of time after a foreclosure to reclaim the real estate property by paying certain amounts specified by law.

b. The borrower conveys all interest in the residential real estate property to the creditor to satisfy the loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. The deed in lieu of foreclosure or similar legal agreement is completed when agreed-upon terms and conditions have been satisfied by both the borrower and the creditor.

The ASU is effective for public entities for fiscal years beginning after 15 December 2014 and interim periods therein. For nonpublic entities, the ASU is effective for annual periods beginning after 15 December 2014 and interim and annual periods thereafter. Early adoption is permitted. 

Currently, IFRS does not have guidance relating to the reclassification of collateralised mortgage loans to foreclosed residential real estate property.

For more information, see Deloitte's Accounting Journal Entry and ASU 2014-04 on the FASB's website.