FASB task force backs counting repeat borrowers in mortgage servicing values

A special FASB task force voted on March 12, 2026, to advance a fix aimed at ending years of inconsistent accounting in the mortgage business, recommending that lenders include recapture rights when valuing mortgage servicing rights portfolios.

The vote by the Financial Accounting Standards Board's Emerging Issues Task Force could rein in a reporting divide that has allowed banks and mortgage companies to treat the same economic value in different ways.

If the full FASB board agrees, lenders that have excluded recapture from mortgage servicing rights, or MSR, valuations may need to change course.

Why recapture matters

Recapture happens when a borrower refinances with the same lender that already services the loan. In that scenario, the lender keeps the customer relationship and the business that comes with it.

That advantage can be worth real money, especially when rates fall and refinancing activity picks up. Servicers already know the borrower, the loan terms and the timing, giving them a clear edge in winning the refinance.

Market participants have long treated that benefit as part of the value of servicing assets, but the accounting practice hasn't been consistent.

A long-running split

Some banks have relied on 2003 banking agency guidance to justify excluding recapture from MSR valuations. Other companies have concluded they can include it, as long as they can support the estimate.

Task force members said the issue was broader than a simple bank-versus-nonbank divide. They noted

that practice has been mixed across the market and that nonbanks are not just MSR buyers; many also originate loans and retain servicing rights.

The result, staff and members said, has been financial statements that are harder for investors to compare.

"It's crystal clear to me that fair value includes recapture," said Dan Palomaki, financial controller at HSBC and the task force member who raised the issue. "Whenever you sell a mortgage servicing right, recapture can't be separated from it, it travels with it."

Potential capital impact for banks

The decision could carry added weight for banks because MSRs already face a 250% risk weighting for regulatory capital purposes.