If you think chief executives don't care about financial accounting standards, FAS 122 will prove you wrong. The release of the accounting rule is changing the way the mortgage banking industry views its mortgage servicing asset investment. The new standard is having a significant impact on a mortgage company's balance sheet, income statement, operations, and servicing strategies (buying, selling, holding, and hedging).

Although some of the risks associated with mortgage servicing rights have always existed, they are highlighted by FAS 122, as an increase in risk will have a more immediate impact on reported financial results and returns.

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