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Thursday, October 15, 2020 5:17:27 PM
When I was still a part of the workforce, I was familiar with maintenance and service contracts. Often the money was received for the length of the contract but only the period in the fiscal period would be posted to revenue and the balance would be a liability (money already received) and listed as Unearned Income. In case of Fannie and Freddie, the G-fees are earned when they purchase the mortgage. If the G-fee is $500 on a $100,000 mortgage the journal entry would be:
Mortgage________Dr. $100,500
Bank____________Cr. $100,000
G-fee___________Cr. $ 500
So looks like currently, when they bundle and sell the mortgages as MBS, $100,500 less amortized portion of G-fees is being recorded as a liability. I wish they'd go back to pre 2010 or exclude the unamortized G-fees from the liabilities.
https://www.fhfa.gov//SupervisionRegulation/Rules/Pages/Comment-Detail.aspx?CommentId=15643
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