Guidance on Mark-to-Market Accounting Approved
The five-member Financial Accounting Standards Board (FASB) on April 2 approved guidance on mark-to-market accounting advocated by NAHB.
The two newly approved proposals — on the valuation of assets in active markets and the treatment of impairments — are aimed at relieving financial institutions from the heavy hits to earnings and capital that resulted from flaws in previous accounting requirements. They were expected to be finalized during the week of April 6.
This decision comes after months of pressure from Congress and others, including a recently formed coalition that NAHB has joined, to seek solutions to fair value accounting problems. The coalition includes the Mortgage Bankers Association, Independent Community Bankers of America, Chamber of Commerce, Financial Services Roundtable, Council of Federal Home Loan Banks, several of the Federal Home Loan Banks and others.
NAHB and coalition members had submitted comment letters to FASB that generally supported the proposed guidance and requested certain modifications and revisions to clarify it.
One of the adopted proposals provides more detailed guidance on evaluating inactive markets and distressed transactions, allowing some reporting entities to build a case that a price quoted in a given market may not be representative of an asset’s economic value or the price a seller would receive for it in an orderly market.
However, in its decision last week the board departed from proposed guidance on management’s ability to use judgment in securities valuations. NAHB is concerned that the guidance on fair value measurement may continue to result in flawed reliance on broker quotes — or “exit prices” — in heavily distressed markets, and it said that the association would continue to work with the coalition and others to correct these outstanding issues.
The action last week affects the accounting treatment of mortgage-backed securities but not acquisition, development and construction loans, which are subject to different accounting requirements that don’t involve the mark-to-market process that FASB is revising.
Downward valuation adjustments to AD&C loans are causing severe problems for home builders, and NAHB is working to address this problem through separate channels.
For more information, e-mail John Dimitri at NAHB, or call him at 800-368-5242 x8529.
Tax Credit Web Site Looks at Opportunity of a Lifetime
Builders and other industry professionals can help spur home sales by referring prospective first-time home buyers to www.federalhousingtaxcredit.com. The NAHB Web site provides detailed information on the $8,000 federal tax credit for first-time home buyers included in the economic stimulus legislation signed into law by President Obama.
Consumers can use the Web site to find information on the tax credit — including a detailed question and answer section. It also includes information about other housing-related and small business measures in the legislation and a number of home-buying resources for consumers.
Spanish Version Also Available Online
A Spanish version of this increasingly popular Web site is also available to provide detailed information on the tax credit to Spanish-speaking first-time home buyers.
Industry professionals are encouraged to highlight either tax credit Web site when marketing to their potential first-time home buyer market.
Plan to Attend Construction Forecast Conference
Plan to attend or watch the 2009 Spring NAHB Construction Forecast Conference & Webcast on Thursday, April 23 in Washington, D.C. to get the latest facts, insights and analysis of the housing industry.
Panels of nationally recognized experts at the day-long conference will discuss economic trends, government policies, developments in the housing industry and the results from NAHB's recent surveys.
For more information and to register, visit www.nahb.org/cfc.
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