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Financial Institution Letters
The Agencies previously issued instructional clarifications that summarized the reporting requirements for derivatives, including mortgage loan commitments, to assist institutions in properly applying the requirements of FAS 133 when preparing their regulatory reports. Based on the Agencies' review of regulatory reports, it is evident that some institutions are not following the appropriate accounting and reporting for commitments to originate mortgage loans that will be held for resale and agreements to sell mortgage loans. Some commonly noted issues are:
Accordingly, this advisory provides additional guidance on the application of FAS 133. In addition, the Agencies expect all institutions, including those that are not required to file reports with the Securities and Exchange Commission (SEC), to follow the guidance in SEC Staff Accounting Bulletin No. 105, Application of Accounting Principles to Loan Commitments (SAB 105).
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