3 rd Quarter 2008 Mortgage Bankers Financial Reporting Form Changes

Transcription

1 3 rd Quarter 2008 Mortgage Bankers Financial Reporting Form Changes Changes to the Mortgage Bankers Financial Reporting Form (Form 1055), effective for entities reporting on or after October 1, 2008 for WebMB 3 rd Quarter, primarily reflect: the adoption of many new accounting pronouncements since the last update to the Form 1055, including Statement of Financial Accounting Standard (FAS) 140, 142, 149, 156, 157, 159 and 160 and Financial Accounting Standards Board Interpretation No. (FIN) 45; adjustments to improve reporting for other accounting pronouncements, including FAS 5, 65, 91 and 133; the separation of multifamily/commercial data from other business activities such as residential portfolio management; and the collection of additional origination and servicing-related revenue, expense, and volume data. The key changes in each section of the Form 1055 are outlined below. Institution Profile The following are additions to the Profile section: Details about external audit reports, including the type of audit opinion; Explanation of significant events during the reporting period, such as the sale of the company or a restatement; Identification of direct parent type ; and Identification of third party services used for inventory/pipeline management and for valuation of mortgage servicing rights (MSRs), including the names of companies used, specific type of services, and frequency, if applicable. Assets The following are changes and additions to the Assets section: Cash and Cash Equivalents are split out into Unrestricted and Restricted designations. FAS 156 and FAS 159 allow companies to elect to report financial instruments at fair value. This change adds significant complexity because companies can now report certain items at fair value, follow pre-fas 156/159 accounting, or use a combination of both fair value and pre-fas156/159 accounting. New lines were added to capture certain assets at fair value, including MSRs, securities, loans and other financial instruments. Securities are now reported on a schedule that includes more granularity, including security type and a distinction between investment grade and non-investment grade. Property & Equipment was previously reported in total. New lines are being added to capture the types of property and equipment. To reflect changes related to FAS 156 and to collect other data, the Rollforward of Mortgage Servicing Rights schedule was expanded to include additional detail. It now breaks out the schedule into sections that relate to: Page 1 of 6

2 Rollforward of Amortized MSRs (excluding Valuation Allowance), Rollforward of Amortized MSR Valuation Allowance, and Rollforward of Fair Value MSRs. Deferred fees, expenses and other basis adjustments relating to FAS 91, which are carried as contra assets, are being changed on the securities and loan schedules. Since derivative values can easily shift from positive to negative, the Derivatives schedule was expanded to include a column for both assets and liabilities. Additional details pertaining to FAS 133 and FAS 149 derivative assets and liabilities, including Interest Rate Lock Commitments and Other Loan Commitments Classified as Derivatives, are being added. Liabilities and Equity The following are additions to the Liabilities and Equity section: Collateralized Mortgage Debt Relating to Financings, Collateralized Mortgage Debt Other, Trust Preferred Securities, Deposits, Advances from Federal Home Loan Banks, Commercial Paper, Guaranty Liabilities under FIN 45, Other Financial Instrument Liabilities, at Fair Value, Taxes Payable, Deferred Tax Liability, Repurchase Reserves, and Noncontrolling Interest, which will be required after the adoption of FAS 160. The following are additions to the Equity Rollforward section: Issuance of New Stock or Conversions of Preferred to Common, Stock Repurchases, Other Capital Contributions (OCI): OCI: Unrealized Gains (Losses) from Derivatives Designated as Cash Flow Hedges OCI: Other Changes in OCI, Cumulative Effect from Adoption of FAS 156, Cumulative Effect from Adoption of FAS 159, Cumulative Effect Adjustments to Retained Earnings Other, Changes in the Carrying Amount of Noncontrolling Interest, which will be required after the adoption of FAS 160, and Equity Adjustments. Page 2 of 6

3 Income The multifamily/commercial column should now only reflect income or interest and expense related directly to originations and servicing operations as well as investment portfolio management for multifamily loans, commercial property, and farm (business) loans. The Income schedule includes a new column to report all income or interest expense related directly to the institution s residential investment portfolio, if applicable. It should also include income from ancillary business operations such as real estate sales, title companies, property management, insurance sales, construction lending, tax services, etc. Other changes on this schedule include: A single section was created for Net Interest Income, collecting both Interest Income and Interest Expense (which was previously in the Expense schedule). The Secondary Marketing Income section was renamed Secondary Marketing Gains/(Losses) on Sale and additional line items are being added, including: Fees Paid to Brokers, Direct Fees and Expenses Reclassified as Gain on Sale in Accordance with FAS 91, Pair-off Expenses and Other Hedge Costs, Recognition of Retained Interests (pursuant to FAS 140), Provision for Repurchases, Lower of cost or market (LOCOM) Adjustments on Loans Held for Sale (pursuant to FAS 65), Income Relating to Interest Rate Lock Commitments (IRLCs) (pursuant to FAS 133), Gains/(Losses) on Derivatives Used to Hedge IRLCs and Loans Held for Sale (pursuant to FAS 133), and Gains/(Losses) on Changes in Fair Value of Loans Held for Sale (pursuant to FAS 159, if applicable). The section for Servicing-Related Non-Interest Income was expanded to include various fields pertaining to MSR valuation including MSR amortization; other than temporary impairment (OTTI); valuation changes (pursuant to FAS 156); hedgerelated changes; and net gain or loss on the sale of servicing rights and REO. A section was added for Other Non-Interest Income that includes: Provision for Credit Losses on Loans Held for Investment, Other Than Temporary Impairment (not MSR-Related) & Other Credit-Related Losses, Net Gain (Loss) from Sale of Securities, Unrealized Gains/(Losses) on Trading Securities, Gains/(Losses) on Other Derivatives or Other Financial Instruments, Gains/(Losses) on Changes in Fair Value of Loans Held for Investment, and Pre-Tax Income/(Loss) from Investments in JVs, Partnerships, and Other Entities. Contra income accounts were added to capture revenues deferred under FAS 91 in several income schedules. Page 3 of 6

4 Non-Interest Expenses and Net Income As described under the Income schedule above, the Non-Interest Expense schedule also includes the new column for residential portfolio and other business. Also as noted above, interest expense items were moved to the Net Interest Income section of the Income schedule. The Non-Interest Expense schedule was expanded to include: Additional line items for loan production personnel compensation, reflecting a break out of certain functional areas; Additional items for Other Non-Interest Income, including Professional Fees, Subservicing Fees Paid, and Changes in REO Valuation Allowance; Contra expense accounts were added to capture expenses deferred under FAS 91; and A new section to capture Corporate Administration/Overhead Allocations, including: Corporate Management, Support, and Other Corporate Personnel Expenses; Corporate Technology Costs; Goodwill Impairment; and Other Corporate Expenses or Allocations. Full-Time Equivalent (FTE) Employees As described under the Income schedule above, the Employees schedule also includes the new column for residential portfolio and other business. Additional line items were added for loan production employees, reflecting a break out of certain functional areas and a line was added to capture corporate administration/overhead employees. Loan Originations Instead of requiring loan types by channel, the Form now requires reporting of only Retail, Correspondent, and Broker channel production in aggregate. Other changes to the Loan Originations schedule include: Loans originated will be reported and broken out by several additional types of loans, including: Prime and Non-prime, Reverse Mortgages, Multifamily, Commercial, Alt Doc, Interest-Only, Option ARM, Loans with Prepayment Penalties, Purchase versus Refinance, Loans with Private Mortgage Insurance, Owner-Occupied versus Non-Owner Occupied/Investor, Loans with Piggyback Seconds, FICO Score Distribution, and Page 4 of 6

5 LTV Distribution. Loans Sold will be reported by investor type, servicing released, and brokered out categories. Various metrics of origination volume will be reported including: weighted average CLTV, weighted average coupon at origination, fall-out ratio, average days in warehouse, and production warehoused in excess of 90 days. Debt Facilities (previously titled Warehouse and Related Lines of Credit) This section was expanded to include the identification of various debt facilities, in addition to warehouse lines, such as: Repurchased Loan lines, Reverse Repurchase Facilities, MSR Lines of Credit, and Asset-Backed Commercial Paper Facilities. Users will submit details for their 10 largest debt facilities, and amounts in total, such as: Facility Provider Name, Outstanding Borrowings, Credit Facility Limit, Wet Sublimit, Repurchase Sublimit, Weighted Average Advance Rate, Tangible Net Worth Requirement, Covenant Violations, Waiver for Violation, and Facility Expiration Date. Servicing Portfolio Users will no longer need to break out loan servicing for company and non-affiliates, servicing for affiliates, and purchased servicing. Other changes to the Servicing Portfolio schedule include: Loans serviced will be reported and broken out by several additional types of loans including: Prime and Non-prime, Reverse Mortgages, Multifamily, Commercial, Interest-Only, Option ARM, Loans with Prepayment Penalties, Owner-Occupied versus Non-Owner Occupied/Investor, Loans with Primary Mortgage Insurance, Loans with Piggyback Seconds, Loans by Investor Type, and Page 5 of 6

6 Loans Removed from Servicing Portfolio during the reporting period. Seriously delinquent loans are also to be broken out by type including: Government, Prime, Seconds, Reverse Mortgages, Multifamily, and Commercial. The Weighted Average Loan Age and portion of loans that had bankruptcy status during the quarter will also be reported. Reserves and Valuation Allowance Rollforwards This schedule replaces the Loss Allowance schedule. It is now structured as a Rollforward schedule with the following sections: Rollforward of Credit Loss Reserves on Loans Held for Investment, Rollforward of Valuation Allowance on REO, Rollforward of Reserve for Other Losses, and Rollforward of Repurchase Reserves. Loan Modifications This new schedule contains a single line that will collect the unpaid principal balance and loan count of loans modified during the reporting period. Selected Cash Flow Data This new schedule includes three lines that calculate a Total Increase/(Decrease) in Cash. The line items that comprise the total are: Net Cash (Used)/Provided by Operating Activities, Cash Flows from Investing Activities, and Cash Flows from Financing Activities. These lines are subtotals from each section of the statement of cash flows. Page 6 of 6