EITF Recommends Clarification on MSR Recapture

Home News & Insights EITF Recommends Clarification on MSR Recapture

On March 12, 2026, the Emerging Issues Task Force (EITF) addressed the accounting treatment of recapture in mortgage servicing rights (MSRs) and recommended that the Financial Accounting Standards Board (FASB) add a project to its technical agenda to clarify current guidance.

Most notably, the Task Force recommended, on a vote of 9-1, that MSRs and recapture be treated as a single unit of account, such that the fair value measurement of an MSR includes the effects of recapture. This recommendation reflects a move toward greater consistency in how MSR cash flows are modeled and valued in practice.

The EITF also reached unanimous agreement on several related items:

  • Recapture should not be explicitly defined (10–0)
    • This allows entities flexibility to apply judgment based on their specific facts and circumstances, rather than being constrained by a prescriptive definition.
  • The proposed guidance should apply to residential MSRs (10–0)
    • The scope is limited to residential servicing assets, where recapture assumptions are most commonly observed in practice.
  • Existing amortization guidance for MSRs should remain unchanged (10–0)
    • The recommendation focuses solely on fair value measurement and does not impact how MSRs are subsequently amortized.
  • No additional disclosures beyond current GAAP requirements should be required (10–0)
    • Entities would not need to expand disclosures, limiting incremental reporting burden.
  • The proposed changes should apply to all entities (10–0)
    • The guidance would be applied consistently across institutions, regardless of size or structure.

If adopted, these recommendations would provide greater clarity around the role of recapture in MSR valuation while maintaining the existing accounting framework. Institutions should monitor developments closely, as this project may have implications for MSR modeling assumptions and valuation practices.

What is the EITF?

The Emerging Issues Task Force (EITF) was established by the Financial Accounting Standards Board to address emerging financial reporting issues and provide timely interpretive guidance. Its work helps reduce diversity in practice without requiring formal standard-setting.

Recent Insights