In accordance with the Emerging Issues Task Force's EITF 99-20, starting first quarter 2001, new accounting guidelines will impact the recognition of interest income on credit- and prepayment-sensitive securitized assets, usually associated with residuals and interest-only strips (including agency IOs).

Further, a semi-controversial impairment accounting provision, which takes into affect factors such as prepayment risk, could cause bond holders to write-down certain high quality assets that would not have been written down under the previous impairment guidelines, according to Hee H. Lee, a senior manager at Ernst & Young.

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