Key insight: See why FASB wants to change how mortgage servicers account for borrower recapture.
What's at stake: Financial entities struggling with inconsistent valuation practices and reduced comparability under current guidance.
On the horizon: The Nov. 9, 2026 deadline for public comments on the valuation proposal.
The Financial Accounting Standards Board issued a proposed accounting standards update Wednesday to improve the accounting guidance for residential mortgage servicing rights.
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A residential mortgage servicing right represents the contractual right to service an underlying residential mortgage loan. Recapture refers to a mortgage servicer's ability to solicit a borrower to refinance an existing mortgage loan and retain the servicing rights on the new loan. Some of FASB's stakeholders have pointed out that the current guidance doesn't specifically state whether the value attributable to recapture should be included when measuring a residential mortgage servicing right, which has resulted in different practices and less comparability.
To address their concerns, the amendments in the proposed update would require an entity to include the effects of recapture when measuring a residential mortgage servicing right by specifying that an entity must value all rights and obligations associated with a residential mortgage servicing contract, including recapture, in accordance with Topic 820, Fair Value Measurement.
FASB is asking its constituents to review and provide comments on the proposal by Nov. 9, 2026.
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