The proposed ASU would require the effects of recapture to be included when measuring the fair value of residential MSRs – eliminating diversity in practice and improving comparability.
Applicability
- Proposed ASU
- All entities that recognize residential MSRs under Subtopic 860-50
Relevant dates
- Proposed ASU issued September 23, 2026
- Comments due November 9, 2026
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. Market participants generally assign value to recapture, which is typically reflected in prices paid for residential MSRs.
Under the proposed ASU, entities would be required to measure the fair value of a residential MSR by valuing all rights and obligations associated with the residential mortgage servicing contract, including the effects of recapture.
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Mark Northan
Partner, Dept. of Professional Practice, KPMG US
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Mark Northan
Partner, Dept. of Professional Practice, KPMG US
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