A proposed Accounting Standards Update would require entities to include recapture when measuring residential mortgage servicing rights, aiming to reduce inconsistent valuation practices and improve comparability.
FASB's proposed ASU would require entities to include recapture when measuring residential mortgage servicing rights, using Topic 820 (Fair Value Measurement).
The change responds to stakeholder concern that current guidance does not clearly state whether recapture value belongs in MSR measurements, causing inconsistent practices.
If adopted, servicers would need to value all rights and obligations in a servicing contract — including recapture — when determining MSR fair value.
# What the proposal is
Update that would change how residential mortgage servicing rights (MSRs) are measured. The proposal would require entities to include the effects of recapture when measuring an MSR and to apply Topic 820, Fair Value Measurement, when valuing all rights and obligations in a servicing contract.
# Why FASB is acting
Stakeholders told FASB that current U.S. GAAP does not clearly indicate whether the value attributable to recapture should be included in an MSR measurement. That lack of clarity has led to different accounting practices across entities and reduced comparability of MSR valuations.
# What recapture means here
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. The proposal treats recapture as one of the rights or obligations that can affect the fair value of a residential mortgage servicing contract.
# What would change in practice
# Timing and next steps
FASB is seeking public comment on the proposal. The deadline for submitting feedback is Nov. 9, 2026. Comments received during the public comment period will inform FASB's next actions before any final standard is issued.
# Practical implications for servicers and preparers
Accounting and valuation teams should evaluate current MSR measurement approaches to identify whether recapture is already captured. If not, they will need to: update valuation models, document assumptions about recapture probability and timing, and assess disclosure impacts under Topic 820.
Audit teams should prepare to examine whether servicers' fair-value measurements reflect all contract rights and obligations, including recapture, and whether inputs and techniques comply with Topic 820.
# What this does not say
# Where to read and comment
FASB published the proposed ASU following the EITF recommendation. Constituents who want to respond must submit comments by the Nov. 9, 2026 deadline noted in the proposal.
Feedback on the proposal, which addresses stakeholder concerns, is being accepted through Nov. 9.
Analysts say the change should boost transparency but is unlikely to move MSR carrying values
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