East Bay Business Daily

What is servicing of assets and liabilities?

Please could you give me an example of when an entity is a party to a servicing contract to service financial assets & financial liability?

Public Comments

1. Transfers of assets may take many forms. Accounting for transfers when the transferor has no continuing involvement with the transferred assets, or with the transferee, has not been controversial. On the other hand, transfers of financial assets frequently occur in which the transferor has some continuing involvement with either the assets or with the transferee. For example, sales that involve recourse, servicing, agreements to reacquire, options written or held, and pledges of collateral represent continuing involvement with the assets or the transferee. Such transfers of financial assets raise issues about the circumstances under which a transfer should be considered as a sale of all or a part of the assets or as a secured borrowing and about how transferrers and transferees should account for sales and secured borrowings.