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STANDARDS TRACKER |
STANDARDS TRACKER
FASB proposed ASU: residential mortgage servicing rights must include recapture in fair
FASB's proposed fix to MSR measurement diversity: recapture goes inside the Topic 820 fair value, comment deadline Nov. 9.
FASB issued a proposed ASU on Sept. 22, 2026 under File Reference No. 2026-ED600, amending Subtopic 860-50 (Transfers and Servicing - Servicing Assets and Liabilities). The Journal of Accountancy reports that the proposal requires an entity to include the effects of recapture when measuring a residential MSR, with all rights and obligations - including recapture - valued in accordance with Topic 820, Fair Value Measurement.
BY THE NUMBERS
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See below EFFECTIVE |
2 SOURCES TRACKED |
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Sep 24 LAST UPDATED |
FASB ISSUER |
CPA Practice Advisor reports the amendments would apply to all entities that recognize residential MSRs under Subtopic 860-50, but would not affect other servicing assets or liabilities recognized under that subtopic. No mandatory effective date is stated in the sources. The public comment period runs through Nov. 9, 2026.
The Journal of Accountancy notes that current guidance does not specifically state whether the value attributable to recapture should be included when measuring a residential MSR, which has resulted in diversity in practice and reduced comparability across servicers. The proposal would resolve that ambiguity by treating an MSR and its associated recapture as a single unit of account subject to Topic 820 measurement.
The ASU is based on a recommendation from FASB's Emerging Issues Task Force, per the Journal of Accountancy. CPA Practice Advisor reports that FASB says the amendments would increase transparency by aligning MSR measurement with how residential MSRs are priced in the marketplace. Transition guidance and whether early adoption will be permitted are not stated in the sources reviewed.
The proposal is still at the exposure draft stage. No final standard has been issued, and an effective date has not been set. Close teams at mortgage servicers and financial institutions that carry residential MSRs should review the proposal text and consider whether their current valuation methodology already captures recapture or would require adjustment if the ASU is finalized.
WHAT TO DO IN THE CLOSE
| Identify whether your entity recognizes residential MSRs under Subtopic 860-50 and assess current recapture valuation methodology. | |
| Compare current MSR valuation models against the Topic 820 fair value requirement proposed for recapture and document any gaps. | |
| Review the full exposure draft (File Reference No. 2026-ED600) and submit comments to FASB by Nov. 9, 2026 if your entity is affected. | |
| Flag the proposal for your external auditors and valuation specialists so they can assess impact on year-end MSR fair value measurements. | |
| Monitor FASB for a final ASU and effective date; no transition guidance is stated in the sources at this stage. |
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QUESTIONS THIS ANSWERS
What is recapture in the context of mortgage servicing rights?
Per the Journal of Accountancy, 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, preserving some or all of the economic benefit of servicing when the existing loan is prepaid.
Which entities does the proposed MSR recapture ASU apply to?
CPA Practice Advisor reports the amendments would apply to all entities that recognize residential MSRs under Subtopic 860-50, but would not affect other servicing assets or liabilities recognized under Subtopic 860-50.
Why is FASB proposing this change to MSR measurement?
The Journal of Accountancy reports that current guidance does not specifically state whether recapture value should be included when measuring a residential MSR, which has resulted in diversity in practice and reduced comparability across entities.
SOURCES
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Previously: SEC proposed rescission of Rule 14a-8: shareholder proposal inclusion requirement
A living page: it is re-read and updated as coverage arrives; last updated Thursday September 24. Facts come from the linked sources; confirm against the issuer's own text before relying on it.
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