Agencies announce overhaul of appraisal guidelines

Banking agencies issue statement regarding capital impact of Fannie, Freddie lossesMortgagePress.comFannie Mae, Freddie Mac, OCC, Emergency Economic Stabilization Act of 2008, On Oct. 24, the federal banking agencies issued an interagency statement regarding the tax relief provisions of the Emergency Economic Stabilization Act of 2008 (EESA). Section 301 of EESA provides for tax relief for financial institutions by treating losses in the sale of the Federal National Mortgage Association (Fannie Mae) and Federal Home Loan Mortgage Corporation (Freddie Mac) preferred stock as ordinary losses, rather than capital losses, for federal tax purposes. The statement permits financial institutions to adjust the tax effects associated with the sale of Fannie Mae and Freddie Mac preferred stock as if Section 301 of EESA had been enacted in the third quarter of 2008, and reminds financial institutions to continue to follow generally accepted accounting principles for the purposes of third quarter regulatory report balance sheets and income statements. The statement includes detailed appendices to assist different types of banking organizations with reporting the effect of the change in the tax treatment of such losses, and also allows banking organizations that have already filed their regulatory reports for the third quarter of 2008 to submit amended regulatory reports. For a copy of the statement, click here.