In January 2023, the FHFA directed Fannie Mae and Freddie Mac to establish and implement risk management policies and procedures for monitoring and valuing MSRs held by their seller/servicers.
A lesser-known driver of the increase in recent MSR values relates to earnings from float income.
The rise in mortgage rates that occurred in 2022 has led to a significant increase in the value of mortgage servicing rights (“MSRs”). However, the increases are not spread evenly across all vintages.
Frank Wilary, Principal at Wilary Winn, recently spoke to the Wall Street Journal for their July 6, 2023, article discussing the impacts of rising interest rates on U.S. banks. Download…
FASB continues to work on refining the interaction between CECL and purchase accounting.
A growing number of states are blocking the ability of credit unions to buy banks amidst competitive concerns.
In March 2022, FASB eliminated TDR accounting for financial institutions that have adopted CECL.
In February 2022, FASB decided to apply PCD accounting to assets obtained in mergers and acquisitions for institutions that have adopted CECL. This avoids the double counting of credit losses for performing loans. In addition, FASB indicated that revised accounting could be applied to the purchases of seasoned loans.
FASB continues to deliberate on accounting for goodwill including testing it for impairment versus amortizing it over time. It appears it is leaning toward the required use of an amortization model.
The magnitude of the changes required by CECL have created uncertainty regarding how to implement it. The Office of the Comptroller of the Currency (“OCC”) updated its Bank Accounting Advisory…