Accounting Standards | September 23, 2026
FASB Seeks to Amend Accounting Guidance for Residential Mortgage Servicing Rights
The Financial Accounting Standards Board issued a proposed Accounting Standards Update on Wednesday aimed at improving accounting guidance for residential mortgage servicing rights.
The proposed ASU is based on a recommendation of the Emerging Issues Task Force, a panel that assists the FASB in improving financial reporting through the identification, discussion, and resolution of financial accounting issues within the framework of the Accounting Standards Codification.
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.
“In this way, the servicer can preserve some or all of the economic benefit of servicing when the existing loan is prepaid through refinancing. Because market participants generally assign value to recapture, that value is often reflected in the prices paid for residential MSRs,” the proposed ASU states.
However, stakeholders have noted that current guidance in Subtopic 860-50, Transfers and Servicing—Servicing Assets and Liabilities, doesn’t specifically state whether the value attributable to recapture should be included when measuring a residential mortgage servicing right, which has resulted in diversity in practice and reduced comparability.
