FASB Releases Proposed ASU on Mortgage Servicing Rights

The FASB has released a proposed Accounting Standards Update (ASU) that would amend ASC 860-50 to indicate that in the measurement of a residential mortgage servicing right (MSR) at fair value under ASC 820, “all of the servicer’s rights and obligations associated with that contract” should be taken into account, including the “mortgage servicer’s ability to solicit a borrower to refinance an existing mortgage loan and retain the servicing rights on the new loan” (also known as “recapture”). The proposal is intended to increase transparency and comparability by decreasing diversity in practice related to how recaptures are considered in the valuation of residential MSRs.

Comments on the proposed ASU are due by November 9, 2026. For more information, see the press release on the FASB’s Web site.