# ASC 860-50-05: Transfers and Servicing — Servicing Assets and Liabilities — 05 Overview and Background Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/860/50/#05-overview-and-background) 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. Tables and mathematical or amendment markup are retained as HTML where Markdown would lose structure. Source downloaded (UTC): 2026-09-10T02:08:06.276Z to 2026-09-10T02:08:06.276Z Record version: sha256:171e5f8d67c7d35734413555f497295657e03e1628580e6a03af580bf05cb83d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 860-50-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/860/50/#05-overview-and-background) SEC content: no ##### [860-50-05-1](https://asc.understandingaccounting.org/asc/860/50/#860-50-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T02:08:06.276Z to 2026-09-10T02:08:06.276Z Record version: sha256:7bc6db6ffebfa53ceafc8efaf4bbea2454276ac4c5cf3db2b17f157ea0362911 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides accounting guidance for [servicing assets](https://asc.understandingaccounting.org/glossary/s/#servicing-assets "A contract to service financial assets under which the benefits of servicing are expected to more than adequately compensate the servicer for performing the servicing. A servicing contract is either: Undertaken in conjunction with selling or securitizing the financial assets being serviced Purchased or assumed separately.") and [servicing liabilities](https://asc.understandingaccounting.org/glossary/s/#servicing-liabilities "A contract to service financial assets under which the estimated future revenues from contractually specified servicing fees, late charges, and other ancillary revenues (benefits of servicing) are not expected to adequately compensate the servicer for performing the servicing."). ##### [860-50-05-2](https://asc.understandingaccounting.org/asc/860/50/#860-50-05-2) Pending content: no Source downloaded (UTC): 2026-09-10T02:08:06.276Z to 2026-09-10T02:08:06.276Z Record version: sha256:06b27962a24ebc84bc89d5f6039f938b7506fc039c59293cc1b981d12c59955d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Servicing is inherent in all [financial assets](https://asc.understandingaccounting.org/glossary/f/#financial-asset "Cash, evidence of an ownership interest in an entity, or a contract that conveys to one entity a right to do either of the following: Receive cash or another financial instrument from a second entity Exchange other financial instruments on potentially favorable terms with the second entity."); it becomes a distinct asset or liability for accounting purposes only in the circumstances described in paragraph [860-50-25-1](https://asc.understandingaccounting.org/asc/860/50/#860-50-25-1). ##### [860-50-05-3](https://asc.understandingaccounting.org/asc/860/50/#860-50-05-3) Pending content: no Source downloaded (UTC): 2026-09-10T02:08:06.276Z to 2026-09-10T02:08:06.276Z Record version: sha256:a3c5a4bd82e1df678a3fa41d9979719ffe6f02c4a85adca4a5b2a0c4b5c6da33 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Servicing of mortgage loans, credit card receivables, or other financial assets commonly includes, but is not limited to, the following activities: 1. a Collecting principal, interest, and escrow payments from borrowers 2. b Paying taxes and insurance from escrowed funds 3. c Monitoring delinquencies 4. d Executing foreclosure if necessary 5. e Temporarily investing funds pending distribution 6. f Remitting fees to guarantors, trustees, and others providing services 7. g Accounting for and remitting principal and interest payments to the holders of [beneficial interests](https://asc.understandingaccounting.org/glossary/b/#beneficial-interests "Rights to receive all or portions of specified cash inflows received by a trust or other entity, including, but not limited to, all of the following: Senior and subordinated shares of interest, principal, or other cash inflows to be passed-through or paid-through Premiums due to guarantors Commercial paper obligations Residual interests, whether in the form of debt or equity.") or [participating interests](https://asc.understandingaccounting.org/glossary/p/#participating-interest "Paragraph 860-10-40-6A defines the term participating interest.") in the financial assets. ##### [860-50-05-4](https://asc.understandingaccounting.org/asc/860/50/#860-50-05-4) Pending content: no Source downloaded (UTC): 2026-09-10T02:08:06.276Z to 2026-09-10T02:08:06.276Z Record version: sha256:f2feeea66de130067758dfe9043dc0c9cd68d347536c83dc7e17015619377831 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A servicer of financial assets commonly receives the following [benefits of servicing](https://asc.understandingaccounting.org/glossary/b/#benefits-of-servicing "Revenues from contractually specified servicing fees, late charges, and other ancillary sources, including float."): 1. a Revenues from [contractually specified servicing fees](https://asc.understandingaccounting.org/glossary/c/#contractually-specified-servicing-fees "All amounts that, per contract, are due to the servicer in exchange for servicing the financial asset and would no longer be received by a servicer if the beneficial owners of the serviced assets (or their trustees or agents) were to exercise their actual or potential authority under the contract to shift the servicing to another servicer. Depending on the servicing contract, those fees may include some or all of the difference between the interest rate collectible on the financial asset being serviced and the rate to be paid to the beneficial owners of those financial assets.") 2. b A portion of the interest from the financial assets 3. c Late charges 4. d Other ancillary sources, including float. A servicer is entitled to receive all of those benefits of servicing only if it performs the servicing and incurs the costs of servicing the financial assets.