Service
KPMG LLP’s professionals utilize their extensive experience and proprietary technologies to assist clients with loan accounting and tax reporting.
KPMG LLP’s professionals utilize their extensive experience and proprietary technologies to assist clients with loan accounting and tax reporting. Our services include model development for:
- Day 2 Accounting Services
- Foreclosed and repossessed property accounting
- Tax reporting (including Federal Financial Assistance reporting considerations)
- Loan Modification
- Model Validation
- Data Management Services
- Conflict Mineral Reporting
- Volker Rule Compliance
- Resolution Planning Compliance
- RESPA Compliance
- National Mortgage Servicing Settlement Compliance
- CFPB Compliance
- Due diligence/loan file review
- Basel III implementation
Effective Yield Model System
The 2008 financial crisis has placed many companies in the position of having acquired loans or debt securities in a purchase business combination subject to ASC 805 (FAS 141 R), including combinations done as FDIC-assisted transactions. Often with these transactions, the expectation is to receive less cash flow than the contractual cash flows of the loan due to evidence of credit deterioration of the borrower, which triggers the accounting for these loans and securities under ASC 310-30 (SOP 03-3).
KPMG’s effective yield model system includes:
- ASC 310-30 (SOP 03-3) prospective level yield, roll forward and impairment functionality
- ASC 310-20 (FAS 91) original effective yield, retrospective effective yield and straight line amortization functionality
- Integrated cash flow amortization engine with intermediate yield functionality to isolate interest coupon and prepayment rate changes in expected cash flows
- Indemnification asset accounting
- Foreclosed property accounting
- FDIC Loss Share functionality
- Tax Effective Yield functionality
- Transaction matrix and chart of accounts
- Journal voucher and reporting
- System control features
Loan Modification and Market Discount System
The 2008 financial crisis has created serious economic stresses within the consumer finance industry. One means to mitigate potential damages is through loan modification. This approach offers distressed borrowers assistance by restructuring their loans with more favorable terms. It also helps preserve the lender’s investment which could otherwise be lost through default.
Performing such modifications, however, carries the possibility of side effects that result from the current tax law. While modifications can mitigate economic distress, they also have the potential to trigger the realization of capital gains or losses, as well as Original Issue Discount (OID). Thus, a well-prepared institution needs to be able to perform the tax computations associated with any loan modifications that are made. KPMG professionals can assist clients with the following loan modification functions:
- Tax significant modification testing and gain/loss functionality
- Processing capabilities
- Tax effective yield functionality
- Book accounting for modified loan functionality
