ASU 2014-14 — Receivables—Troubled Debt Restructuring by Creditors (Subtopic 310-40)

Under certain government-sponsored loan guarantee programs, such as those offered by the Federal Housing Administration (FHA) and the Department of Veterans Affairs (VA), qualifying creditors can extend mortgage loans to borrowers with a guarantee that entitles the creditor to recover all or a portion of the unpaid principal balance from the government if the borrower defaults.

The objective of this Update is to reduce diversity in practice by addressing the classification of foreclosed mortgage loans that are fully or partially guaranteed under government programs. Currently, some creditors reclassify those loans to real estate as with other foreclosed loans that do not have guarantees; others reclassify the loans to other receivables.

The amendments affect creditors that hold government-guaranteed mortgage loans, including those guaranteed by the FHA and the VA.

This Accounting Standards Update is the final version of Proposed Accounting Standards Update EITF-13F—Receivables—Troubled Debt Restructurings by Creditors (Subtopic 310-40): Classification of Certain Government-Guaranteed Residential Mortgage Loans upon Foreclosure, which has been deleted.

Issued: August 8, 2014