Most lenders appear satisfied with a proposed amendment to the accounting rules for measuring declines in the value of mortgage servicing portfolios. But at least one trade group, America's Community Bankers, is still uneasy over possible potholes.

The amendment drafted by the Financial Accounting Standards Board would require lenders to segment their portfolios by risk characteristics and measure any declines in value in each segment. Gains in any segment may not be used to offset losses in other segments. The potential for volatility upset people in the industry.

But the board also decided to allow lenders considerable discretion in how they identify the risk factors. This flexibility should soften the adverse impact of the impairment amendment, most lenders agree.

But the trade group is worried that this very flexibility could lead to problems. In a letter to the accounting board, Randall H. McFarlane, the group's director of government relations, said:

"The approach to impairment that has been proposed in the draft requires stratification based on one or more of the predominant risk characteristics of the underlying loans. This approach introduces additional subjectivity by allowing mortgage servicers to define predominant strata without sufficient guidance on what constitutes a stratum.

"The board's allowance of biased stratification will result in inconsistent application . . . inconsistent financial results, and reduced utility for the users of financial statements."

But the community bankers group is reluctant to make too strong a stand at this point for fear of further delaying the long-awaited amendments to FAS 65, which deals mainly with the valuation of servicing rights.

"We believe the amendments are a useful and worthwhile contribution even though we have some reservations," said Marti Sworobuk, program manager for accounting and financial management at the trade group "Our primary concern is that they be released on a timely basis."

She was still hoping, however, for some modifications before the amendmends become final.

Sources close to the FASB process said it was likely that the amendments would become final sometime next month.

Ms. Sworobuk said the next big mortgage banking issue that the FASB will be dealing with is treatment of transactions in which banks securitize their own loans and hold the securities themselves. At issue is whether a sale and purchase takes place even though the asset remains with the bank.

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