February 16, 1996
TO: ACCOUNTING/TREASURERS COMMITTEE No. 9-96
INDEPENDENT ACCOUNTANTS ADV. GROUP No. 3-96
RE: DRAFT STRIPPED MORTGAGE BACKED SECURITIES WHITE PAPER
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Enclosed is a draft copy of the Stripped Mortgage-Backed Securities white paper
prepared by the Institutes Accounting Policy Subcommittee. The paper describes accounting
and financial statement reporting for stripped mortgage-backed securities, which are more
commonly referred to as interest only ("IO") and principal only ("PO") securities. The paper
also describes the operational, pricing, tax and SEC yield treatment of IO and PO securities.
Please review the draft paper and be prepared to provide the Accounting Policy
Subcommittee with any comments you may have at the upcoming March 7 meeting of the
Accounting/Treasurers Committee. If no substantive comments are received, you may be
asked to vote to approve this document for distribution to the industry as recommended
guidance.
Gregory M. Smith
Director - Operations/
Compliance & Fund Accounting
Enclosure