“The new FASB rules could help boost banks’ earnings by making it clear that institutions can account for mortgage-backed securities and other assets based on their internal estimates of cash flow and other factors, rather than relying on sales prices in largely inactive markets.”
This seems to address accounting for MBS – I’m inquiring about the loans that Banks hold directly in their portfolio. When a Borrower stops paying, the Bank has to address that change in some way on their balance sheet, typically through an increased reserve. They can’t PV the income stream because there isn’t one anymore, so you’d think they’d have to take into consideration their collateral value and reserve accordingly.
