At last week's meeting, the Financial Accounting Standards Board reiterated many previously indicated stances to be incorporated into the second exposure draft of the amendment to FAS 140. In a "surprise move" - described as such in an informal meeting recap from Marty Rosenblatt of Deloitte & Touche - the Board decided that MBS generated by swapping whole loans for GSE-guaranteed mortgages into a QSPE must be accounted for at fair value with gains or losses recognized, Rosenblatt said.

This falls in line with the Board's previous decision that gains and losses should be recognized when a retained interest is generated through a securitization, as opposed to the previously used allocated basis method.

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