US banks ask for mortgage losses reprieve

US banks have not developed systems to account for many of their mortgage
losses, and are asking rulemakers if they can avoid reporting them.

Many mortgage contracts are being restructured unexpectedly, the New York
Times reported. Under rules dating back to the savings and loans crisis, banks
have to report the restucturing losses, even if they can recoup the principal.

But the banks want the rule. FAS 114, relaxed. Though they are happy dealing
with the rule for bigger loans, following it for large numbers of smaller loans
is too administratively difficult, they argue.

‘No one anticipated a day when potentially hundreds of thousands of
residential mortgage loans would be modified,’ said Alison Utermohlen, an
official of the US Mortgage Bankers Association.

Utermohlen added that several members of the association did not have
adequate computer systems which could comply with the rule.

Further reading:

the New York Times story: Banks plead they can’t follow rules

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