The federal banking agencies extended the existing capital requirements for mortgage servicing assets last week.
The rule is designed to prevent different rules from taking effect while the agencies – the Federal Deposit Insurance Corp, Federal Reserve Board, and Office of the Comptroller of the Currency — consider a broader simplification of the capital rules.
The agencies have been conducting a review of regulations under the Economic Growth and Regulatory Paperwork Reduction Act to simplify the capital rules and reduce the regulatory burden, particularly for community banks.
As a result of that review, the agencies released a proposal in September that would simplify the capital rules’ treatment of mortgage servicing assets for some banks. However, before that rule was finalized, the current transitional treatment was scheduled to be replaced with a different treatment on Jan. 1, 2018.
The final rule is mostly similar to the proposal issued by the agencies to extend the existing capital requirements for certain banks as they relate to mortgage servicing assets, certain deferred tax assets, investments in the capital instruments of unconsolidated financial institutions, and minority interest.
The final rule would apply only to banks with less than $250 billion in total assets and less than $10 billion in total foreign exposure. It will go into effect on Jan. 1, 2018. Banks that are subject to the advanced approaches rules are not impacted by this rule.