AccessMyLibrary provides FREE access to over 30 million articles from top publications available through your library.
Create a link to this page
Copy and paste this link tag into your Web page or blog:
Point of View: FAS 133 Complications.(Financial Accounting Standards Board)
Mr. Kempner is president and chief executive officer of the Mortgage Bankers Association. This viewpoint is an excerpt from a comment letter the MBA sent to the Financial Accounting Standards Board. The text of the full letter can be found on the MBA's website.
The Mortgage Bankers Association is very concerned that some issuers, investors and others believe the guidance in FAS 133, as amended by FAS 155, requires "plain vanilla" pass-through mortgage-backed securities to be evaluated under paragraph 13.b of that statement. MBA believes the application of that paragraph to certain discounted pass-through MBS would have an unexpected, chilling effect on the market by reducing the demand for MBS by investors that do not want to undertake the challenge of having to bifurcate a derivate in some inexplicable way or, alternatively, of recognizing the earnings volatility occasioned by temporary fluctuations in interest rates.
MBA has reviewed FAS 133 and all related literature and believes it supports our position that pass-through MBS are not required to be evaluated under paragraph 13.b for the reasons explained below.
In drafting FAS 133, the board cited "prepayable mortgages" as examples of compound instruments with embedded derivatives that are "clearly and closely related" to their mortgage host contracts. The fact that the board singled out prepayable mortgages for identification and discussion to illustrate the "clearly and closely related" language in FAS 133 suggests that the relationship of the embedded prepayment option and the mortgages is so well established and understood that there would be no need to apply the quantitative tests in paragraph 13 to the instrument to prove the point. Consequently, MBA believes the guidance in paragraph 13, and 13.b in particular, was developed by the board with other hybrid instruments in mind; namely, structured finance transactions involving specifically negotiated terms and conditions designed to appeal to investors' objectives.
By contrast, the prepayment option in mortgages is intended to accommodate borrowers' needs, rather than investors' desires.
MBA believes industry practice reflects a broad based understanding that the embedded prepayment options in loans and MBS meet the "clearly and closely" related test in paragraph 12 without the ...
- MBS and ABS win preliminary exemptions from FAS 155.(asset backed...
- Newspaper article from: Asset Securitization Report Mitchell, Donna October 30, 2006 700+ words
...a huge burden from MBS and ABS investors...requirements under FAS 155. Industry participants...exception for ABS and MBS in tests for FAS 155, which govern...perform tests on ABS and MBS to determine if they...derivatives as defined by FAS 133, the previous...
- FAS 123R: accounting for stock options; Tips for an increasingly complex task.
- Magazine article from: California CPA Regan, Greg Lombardi, Matt March 1, 2007 700+ words
...Oracle, are employing the MBS. In practice, this model...typically applied under FAS 123. However, some studies have found that the MBS results in higher fair...employee share option" (FAS 123R Sec. 15). The explanation...over time, whereas the MBS utilizes constant values...
- A.M. Best Special Report: Increased Bank Exposure to MBS Contributing to...
- Press release article from: Business Wire August 28, 2007 700+ words
...mortgage-backed securities (MBS), may mean more volatile assets...have increased their exposure to MBS in an effort to enhance yield...enhanced technology increased the MBS market to more than $6 trillion. * Implementation of FAS 115 and the one-time reclassification...
- FAS 156 makes it simple for servicers.(Financial Accounting Standards)
- Newspaper article from: Asset Securitization Report Mitchell, Donna March 27, 2006 700+ words
...liabilities for most MBS deals. The Statement...156, which amends FAS 140, allows servicing...three scenarios when FAS 156 applies: when...purpose vehicle in an MBS deal, and the transferor...The $5.4 billion MBS market might be particularly interested in FAS 156, because servicers...
- Point of View: FAS 133 Complications.
- News wire article from: Mortgage Line Kempner, Jonathan November 22, 2006 700+ words
...MBA has reviewed FAS 133 and all related...that pass-through MBS are not required to...133, as amended by FAS 155 and interpreted...require pass-through MBS to be evaluated under...require pass-through MBS to be evaluated under...have already adopted FAS 155 are preparing...
- Fannie Mae headline risk to have a muted impact on MBS.(Mortgage backed...
- Newspaper article from: Asset Securitization Report Sibayan, Karen October 10, 2005 700+ words
...stock more than the agency debt or MBS," said Amin Majidi, head of MBS research at Deutsche Bank Securities...adding that the main positive for MBS is that OFHEO gave both of the...Fannie Mae failing to comply with FAS 133, which pertains to hedge...
- Principia launches asset backed and mortgage backed securities capability in...
- Press release article from: M2 Presswire November 21, 2000 700+ words
...10,000 modeled ABS/MBS securities, and PAS provides...reporting standards such as FAS 133 and IAS 39. Brian...Vehicles managing ABS/MBS instruments. Our clients...income (including ABS/MBS), FX and equity index...full compliance with both FAS 133 and IAS 39 accounting...
- FASB Move May Bode Well for MBS; Bank MBS Sale a Concern.
- Magazine article from: National Mortgage News Sinnock, Bonnie October 30, 2006 700+ words
...collateralized mortgage obligations from FAS 155, according to various Wall...floaters will also not be subject to FAS 155," Mr. Crawford said in...should have limited impact on MBS if the bank replaces securities...still a long-term negative for MBS spreads, since it could remove...
