In a meeting described as inconclusive, not surprising and somewhat disappointing, the FASB met last Wednesday to tackle the revised version of the Q&A on the CMBS issue released following a discussion last May 16.

Market participants were hesitant to draw conclusions from the meeting because it was hard to understand what was really going on via the phone, where people listened in on the Board's conversation.

There was one high point though. The revised version of the Q&A that was discussed during the meeting now allows servicers to purchase defaulted loans at "fair market value." However, according to a Merrill Lynch update, the FASB said no to nearly all of the industry's requests including saying no to the "decision tree" language that was used by Credit Suisse First Boston in a recent deal.

"Clearly FASB was not responsive to the concerns raised by the 21 commentators on the Q&A," said Michael Youngblood, managing director of real estate research at Banc of America Securities. "In fact, it was dismaying that the staff dismissed these comments as complaints about a lack of due process.

However, Youngblood said that one may not pass final judgment until the final Q&A that would be released in an Emerging Issues Task Force meeting to be held on July 18 or 19. Meanwhile, FASB representatives said the application of the final Q&A would be prospective and would not affect deals done between April 1, 2001 and the publication of the final Q&A.

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