Last month the Financial Accounting Standards Board passed the long- awaited Financial Accounting Standard 122. The key changes brought about by this new standard are the required capitalization of originated mortgage servicing rights and the creation of more conservative guidelines for measuring "impairment" on all mortgage servicing.

This new standard will change the reported financial results of virtually every U.S. mortgage banking operation. Thus, it is important to understand not just the financial reporting aspects, but the business ramifications of this new standard.

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