January 9, 2008
Servicing considerations for securitized sub-prime loans
The Office of the Chief Accountant ("OCA") of the Securities Exchange Commission ("SEC") has issued a letter to the Committee on Corporate Reporting and the Center for Audit Quality regarding the application of Financial Accounting Standards Board ("FASB") Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities. The letter discusses the guidance issued by the American Securitization Forum ("ASF"), Streamlined Foreclosure and Loss Avoidance Framework for Securitized Subprime Adjustable Rate Mortgage Loans ("ASF Framework"), and provides the OCA's views on how that guidance interacts with the restrictive attributes of a qualifying special-purpose entity ("QSPE") under Statement 140.
