Board of Governors of the Federal Reserve System |
Federal Deposit Insurance Corporation
National Credit Union Administration
Office of the Comptroller of the Currency
Office of Thrift Supervision
Agencies Clarify Guidance on the Accounting and Reporting
for Loans Held for Sale
WASHINGTON -- The federal financial institution regulatory agencies today issued guidance to institutions and examiners about the appropriate accounting and reporting treatment for certain loans that are sold directly from the loan portfolio or transferred to a held-for-sale account.
The Interagency Guidance applies when:
The Interagency Guidance clarifies existing instructions and promotes accounting transparency consistent with generally accepted accounting principles (GAAP). The guidance reminds institutions to appropriately report reductions in the value of loans transferred to held-for-sale through a write-down of the recorded investment to fair value upon transfer. At the same time, there should be a charge to the institution's allowance for loan and lease losses. Institutions are also reminded that loans transferred to a held-for-sale account should continue to be accorded the same past-due and nonaccrual treatment as other loans.
The Securities and Exchange Commission said in the attached letter to the agencies that it had reviewed the Interagency Guidance and determined that the guidance will assist in promoting consistent accounting and reporting treatment for the loan sales and transfers of loans to held- for-sale accounts that are within the scope of the agencies' guidance.
2001 Banking and consumer regulatory policy