{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/720/948/","source":"FASB Accounting Standards Codification, Basic View","usage":"Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective.","number":"720-948","topic":"720","title":"Financial Services—Mortgage Banking","area":"Expenses","paragraphs":4,"summary":"This Subtopic governs how a mortgage banking enterprise accounts for fees it pays to permanent investors to assure the ultimate sale of residential or commercial loans. Such commitment fees are expensed when the loans are actually sold to the permanent investor, or earlier if it becomes evident the commitment will not be used. Because residential commitments typically cover blocks of loans, the fee is allocated to individual loan transactions on the ratio of the individual loan amount to the total commitment amount.","concepts":["loan commitment fees","permanent investor","mortgage banking","expense recognition","block of loans allocation","sale of loans"],"categories":["Recognition","Industry-specific","Financial instruments"],"level":"intermediate","topic_title":"Other Expenses","sections":[{"number":"00","label":"00 Status","anchor":"00-status","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"720-948-00-1","para":"00-1","html":"
The following table identifies the changes made to this Subtopic.
Paragraph Action Accounting Standards Update Date
Permanent Investor Added Maintenance Update 2017-06 (PDF) 04/07/2017
948-720-25-1 Amended Maintenance Update 2017-06 (PDF) 04/07/2017
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This Subtopic addresses the accounting for residential or commercial loan commitment fees.
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This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 948-10-15.
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Fees paid to permanent investors to ensure the ultimate sale of the loans (residential or commercial loan commitment fees) shall be recognized as expense when the loans are sold to permanent investors or when it becomes evident the commitment will not be used. Because residential loan commitment fees ordinarily relate to blocks of loans, fees recognized as revenue or expense as the result of individual loan transactions shall be based on the ratio of the individual loan amount to the total commitment amount.
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Such commitment fees are expensed when the loans are actually sold to the permanent investor, or earlier if it becomes evident the commitment will not be used. Because residential commitments typically cover blocks of loans, the fee is allocated to individual loan transactions on the ratio of the individual loan amount to the total commitment amount.","key_points":["The Subtopic addresses accounting for residential or commercial loan commitment fees (720-948-05-1).","Fees paid to permanent investors to ensure the ultimate sale of loans are recognized as expense when the loans are sold to the permanent investors, or when it becomes evident the commitment will not be used (720-948-25-1).","Because residential loan commitment fees ordinarily relate to blocks of loans, amounts recognized as revenue or expense from individual loan transactions are based on the ratio of the individual loan amount to the total commitment amount (720-948-25-1).","Scope follows the Overall Subtopic scope for mortgage banking activities in Section 948-10-15 (720-948-15-1)."],"categories":["Recognition","Industry-specific","Financial instruments"],"audience_level":"intermediate","student_note":"Remember the direction of the payment: here the mortgage banker pays a fee to a permanent investor, so it is an expense deferred until the loans are sold (or the commitment lapses), not an immediate period cost. The common mistake is expensing the fee when paid rather than matching it to the loan sale, and forgetting the pro-rata allocation across the block of loans.","related_topics":["948-10","948-310","310-20","860"],"key_concepts":["loan commitment fees","permanent investor","mortgage banking","expense recognition","block of loans allocation","sale of loans"],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:159b0965df136bb7b53b141acae64d014afbd96e4751823fd0051e46e9aaa397","downloaded_from":"2026-09-10T01:11:56.550Z","last_downloaded_at":"2026-09-10T01:12:06.328Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},"related":[{"number":"310-948","title":"Financial Services—Mortgage 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