The Mortgage Bankers Financial Reporting Form (MBFRF)
October 2008 Updates
December 2008
Contents
Overview Summary of Key Changes
Navigation and Edit Checks Institution Profile Assets Liabilities and Equity Income Selected Cash Flow Data Non-Interest Expense FTEs Loan Origination Debt Facilities Servicing Portfolio Other SchedulesN, P, Q Reserves and Valuation Allowance Rollforwards Loan Modifications
Available Resources
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Recent Changes
Overview
Major overhaul required
Accounting and other industry changes, including proliferation of mortgage products, have occurred in recent years
Market environment necessitates additional disclosure
Patchwork of modifications to form were made in the past
Version 2.0 of the MBFRF reflects revisions for:
New accounting pronouncementsStatement of Financial Accounting Standard (FAS) 140, 142, 149, 156, 157, 159 and 160 and Financial Accounting Standards Board Interpretation No. (FIN) 45 Improved reporting for other accounting pronouncements Separation of multifamily/commercial data from other business activities such as residential portfolio managementFAS 5, 65, 91 and 133
Collection of additional origination and servicing-related revenue, expense, and volume data
Effective for entities reporting on or after October 1, 2008 for WebMB 3rd Quarter
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Summary of Key Changes
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Recent Changes
Navigation and Edit Checks
New look and feel, but similar navigation as previous form
Navigation menus
Drop down selections
Form Summary Definitions available for each field
Substantially more edit checks added
Warningshighlight unusual circumstances (potential errors). These do not have to be resolved before form can be submitted. Each warning, however, will require an explanation.
Fata errorsmust be corrected before form can be submitted Cross-check among schedules, e.g., Schedule OReserves and Valuation Allowance Rollforwardschecks for related balances on Schedules A and C All warnings and fatal errors appear after the first time a user selects to submit the form
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Institution Profile
External audit reportCompanies now provide details, including the type of audit opinion
Explanation of Significant EventsMust be provided
Direct parent typeNew field Third-party services Whether or not the institution uses third-party services for:
Inventory/pipeline management Valuation of mortgage servicing rights (MSRs)
Names of companies used, specific type of services, and frequency, if applicable
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Assets
FAS 156 and FAS 159 fair value reporting
New lines added to capture assets at fair value, including mortgage servicing rights, securities, loans and other financial instruments Securities and Mortgage Loan detail captured on schedules with four column entries for each line item Held For Sale
1. HFS, at LOCOM (Lower of Cost or Market) 2. HFS, at Fair Value If fair value option was elected under FAS 159
Four accounting categories for loans (each in a column):
Held For Investment
3. HFI, at Amortized Cost 4. HFI, at Fair Value If fair value option was elected under FAS 159
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Assets
Securities Schedule (A030)
Includes more granularity
Securities classified as investment grade or non-investment grade
13 types of securities vs. 6 in the old form 4 categories of securities vs. 3 in the old form
All balances now entered on a single schedule
Mortgage Loans Schedule (A060)
All loan balances are entered on a single schedule Includes more granularity
15 types of loans vs. 9 in the old form 4 categories vs. 2 in the old form 9 types of adjustments vs. 4 in the old form
New memo field for non-interest earning loans New memo field for loans accounted for as financings
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Assets
Mortgage Servicing Rights Rollforward Schedule (A-120R)
Expanded to include additional detail to reflect changes related to FAS 156 and to collect other data All MSRs now entered on a single schedule Now two types of MSRs reported: Amortized MSRs, and Fair Value MSRs (created by FAS 156) Two new rollforward schedules relating to Amortized MSRs replaced a single rollforward schedule on the old form:
Rollforward of Amortized MSRs (excluding Valuation Allowance) Rollforward of the amortized MSR Valuation Allowance
A third section is for Rollforward of Fair Value MSRs
Derivatives schedule (A-220 B-180) expanded
Includes a column for both assets and liabilities Additional details added pertaining to FAS 133 and FAS 149 derivative assets and liabilities, including Interest Rate Lock Commitments and Other Loan Commitments Classified as Derivative
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Assets
Other changes to Assets Schedule and related sub-schedules:
Cash and Cash Equivalents split out into "Unrestricted" and "Restricted" designations More detail for
Other Assets (Schedule A-230) Property & Equipment
Deferred fees, expenses and other basis adjustments relating to FAS 91, which are carried as contra assets, changed on the securities and loan schedules
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Liabilities and Equity
Additional line items added to Liabilities and Equity schedule:
Collateralized Mortgage Debt Relating to Financings
Collateralized Mortgage Debt - Other
Trust Preferred Securities Deposits Advances from Federal Home Loan Banks
Commercial Paper
Guaranty Liabilities under FIN 45 Other Financial Instrument Liabilities, at Fair Value Taxes Payable
Deferred Tax Liability
Repurchase Reserves Non-controlling Interest (required after the adoption of FAS 160)
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Liabilities and Equity
Equity Rollforward Schedule (B-350R) expanded to include additional line items:
Issuance of New Stock or Conversions of Preferred to Common
Stock Repurchases OCI: Unrealized Gains (Losses) from Derivatives Designated as Cash Flow Hedges OCI: Other Changes in OCI Cumulative Effect from Adoption of FAS 156 Cumulative Effect from Adoption of FAS 159 Cumulative Effect Adjustments to Retained Earnings - Other Changes in the Carrying Amount of Non-controlling Interest (will be required after the adoption of FAS 160) Equity Adjustments
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Income
Summary of columns used for Schedules C, D, and H
Total
Accounts for all cumulative income, expense, or employee count for the appropriate period
Automatically totaled to equal sum of entries in adjacent columns, unless there is a single entry for a total field
Origination, Warehousing, and Secondary Marketing Includes all income, expense, or employee count related directly to the origination, warehousing, and marketing of 1-to-4 unit residential loans Excludes items related to those loans held in the institutions investment portfolio Includes all income, expense, or employee count related directly to servicing 1-to-4 unit residential loans Includes activity related to REO for 1-to-4 unit residential loans Excludes items related to those loans held in the institutions investment portfolio
Servicing
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Income
Summary of columns used for Schedules C, D, and H (continued) Multifamily/Commercial
New column in MBFRF version 2.0
Includes income, expense, or employee count for all business for multifamily loans, commercial property, and business farm loans:
Originations Servicing operations Investment portfolio management
Excludes items that might be considered all other business or investment portfolio loans that are not multifamily or commercial property Includes all income, expense, or employee count related directly to the residential investment portfolio, if applicable Includes ancillary business operations such as real estate sales, title companies, property management, insurance sales, construction lending, tax services, etc.
Residential Portfolio Management and All Other
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Income
Significant restructuring of this schedule (Schedule C) from previous version Single section for Net Interest Incomeboth Interest Income and Interest Expense collected on Schedule C Secondary Marketing Income section renamed "Secondary Marketing Gain/(Loss) on Sale" and additional line items added, including:
Fees paid to brokers Direct fees and expenses reclassified as "gain on sale" in accordance with FAS 91
Pair-off expenses and other hedge costs
Recognition of retained interests (pursuant to FAS 140) Provision for repurchases Lower of cost or market (LOCOM) adjustments on loans held for sale (pursuant to FAS 65)
Income relating to interest rate lock commitments (pursuant to FAS 133)
Gains/(losses) on derivatives used to hedge IRLCs and loans held for sale (pursuant to FAS 133) Gains/(Losses) on Changes in fair value of loans held for sale (pursuant to FAS 159, if applicable)
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Income
Servicing-Related Non-Interest Income section expanded to include:
Mortgage Servicing Rights (MSR) amortization Other than Temporary Impairment (OTTI) Valuation changes (pursuant to FAS 156) Hedge-related changes Net gain or loss on the sale of servicing rights and REO
Contra income accounts added to capture revenues deferred under FAS 91
Other Non-Interest Income section added that includes:
Provision for Credit Losses on Loans Held for Investment Other Than Temporary Impairment (not MSR-related) & Other Credit-Related Losses Net Gain (Loss) from Sale of Securities Unrealized Gains/(Losses) on Trading Securities Gains/(Losses) on Other Derivatives or Other Financial Instruments Gains/(Losses) on Changes in Fair Value of Loans Held for Investment Pre-Tax Income/(Loss) from Investments in JVs, Partnerships, and Other Entities
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Selected Cash Flow Data
New Schedule CF with three lines to calculate a Total Increase/(Decrease) in Cash:
Net Cash (Used)/Provided by Operating Activities
Cash Flows from Investing Activities Cash Flows from Financing Activities.
These lines are subtotals from each section of the statement of cash flows
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Non-Interest Expense
Non-Interest Expense schedule expanded to include:
Additional line items for loan production personnel compensation, reflecting a break out of certain functional areas Additional items for Other Non-Interest Income, including Professional Fees; Subservicing Fees Paid; Changes in REO Valuation Allowance Contra expense accounts added to capture expenses deferred under FAS 91 New section to capture Corporate Administration/Overhead Allocations, including:
Corporate management, support, and other corporate personnel expenses Corporate technology costs Goodwill impairment Other corporate expenses or allocations
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Recent Changes
Non-Interest Expense
Interest expense items moved to the Net Interest Income section of Income Schedule
Changes in reporting Depreciation expense
No longer a separate depreciation line item Depreciation expenses should be included in related expense line items, e.g.:
Furniture, fixtures & equipment depreciation expense should be included in Occupancy and Equipment expense line Technology depreciation expense should be included in TechnologyRelated Expense
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Recent Changes
FTEs
Employees Schedule (Schedule H) now includes columns for reporting employees by one of the four business types
Additional line items added for loan production employees, reflecting a break out of certain functional areas
Memo line added to report number of temporary or contractor personnel included in FTE numbers
Line added to capture corporate administration/overhead employees, only in total
Number of FTEs should be related directly to Personnel compensation expense as reported in Schedule D System warnings for entering loan origination or servicing data but no related personnel
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Loan Originations
Retail, Correspondent, and Broker channel production reported in aggregate only now, instead of requiring loan types by channel
New section added to report and break out loans originated by additional characteristics and types, including prime and nonprime, reverse mortgages, multifamily, commercial, alt doc, interest only, option arm, loans with prepayment penalties, purchase versus refinance, loans with private mortgage insurance, owner-occupied, loans with piggyback seconds, FICO score distribution, and LTV distribution
Loans sold reported by investor type and by the volume of those that were servicing released and brokered out
Includes Production Kept in Portfolio/Held for Investment and Production Sold through Non-Agency Securitizations with Sale Treatment
Now for first residential 1- to 4 unit mortgages only; total Multifamily/Commercial Loans Sold reported separately in total
Various origination volume metrics reported, including weighted average CLTV, weighted average coupon at origination, fall-out ratio, average days in warehouse, and production warehoused in excess of 90 days
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Debt Facilities
Debt Facilities Schedule (Schedule K) expanded significantly
Designed to capture not just warehouse lines, but all types of debt facilities Details reported for warehouse lines of credit that are used primarily to fund mortgages held for sale and other lines of credit to finance repurchased loans and mortgage servicing rights Also reported are on-balance sheet debt relating to reverse repurchase facilities for which the institution serves as the seller/borrower and asset backed commercial paper facilities
Information is captured in the various columns on the schedule through drop down boxes and data entry Total outstanding borrowings on Schedule K must equal the total outstanding borrowings reported in the first line on Schedule B Note: Schedule K meant to capture specific kinds of debt, primarily used for short-term funding of mortgages held for sale; the Liabilities and Equity Schedule (Schedule B) captures other types of debt
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Debt Facilities
Details required for institutions10 largest debt facilities, and amounts in total:
Whether the financing is provided by an affiliate
The type of facility Outstanding borrowings Credit facility limit
Sublimits
Weighted Average Advance Rate (by outstandings) Tangible net worth requirement Whether or not there have been any covenant violations
The facility expiration date
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Servicing Portfolio
No longer need to break out loan servicing for company and nonaffiliates, servicing for affiliates, and purchased servicing
Other changes to the loan originations schedule include:
Loans serviced reported and broken out by several additional types of loans, including prime and non-prime, reverse mortgages, multifamily, commercial, interest only, option arm, loans with prepayment penalties, owner-occupied, loans with primary mortgage insurance, loans with piggyback seconds, loans by investor type, and loans removed from the portfolio during the reporting period Weighted average loan age and portion of loans that had bankruptcy status during the quarter reported Seriously delinquent loans
Also broken out by type, including government, prime, seconds, reverse mortgages, multifamily, and commercial
This section at the bottom of Schedule L replaces the old Schedule J
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Other SchedulesN, P, Q
No major changes made to the following schedules:
Recourse Exposure (Schedule N)captures the volume of loans where the company has repurchase, make whole, or other recourse obligations GNMA Pass-Through Data (Schedule P) Pledged or Restricted Items (Schedule Q)
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Reserves and Valuation Allowance Rollforwards
Schedule O replaces Loss Allowance schedule; significant changes from previous form:
Completely different structure for the names of reserves and allowances; new names consistent with typical mortgage company financial reporting practices
Now structured as a rollforward schedule with the following four sections:
Rollforward of Credit Loss Reserves on Loans Held for Investment
Rollforward of Valuation Allowance on REO Rollforward of Reserve for Other Losses Rollforward of Repurchase Reserves
Two types of edit checks performed for each rollforward:
First, the one line item that increases the balance during the period compared to corresponding amount on the income statement Second, the ending balance compared to the corresponding amounts on the balance sheet (or related rollforward schedule)
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Loan Modifications
New schedule (Schedule R) single line for the unpaid principal balance and loan count of loans modified during the reporting period
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Available Resources
Help information on WebMB www.mbfrf.org
General Help, FAQs, MBFRF Overview (Job Aid), and WeBMB definitions available from left navigation menu Click on any field name to get specific definition
Questions regarding the MBFRF, contact the WebMB Administrator:
[email protected] / (800) 820-2016 or local (571) 382-5555
Technical issues with the site, contact Sycamore.US:
[email protected] / (866) 479-2266 or local (301) 668-4681) ext. 370
Newbold Advisors
Terry Couto: [email protected] / 727-492-7417
The revised MBFRF was developed in conjunction with Newbold Advisors. The on-going administration of the MBFRF is with the consortium of Freddie Mac, Fannie Mae, Ginnie Mae, and the Mortgage Bankers Association. Although questions specific to the completion of the form should be directed to the WebMB Administrator hotline, Newbold provides additional related accounting and consulting services for mortgage industry participants.
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