Research Paper on:
Mortgage Companies and SFAS 133's Effects

Unformatted Sample Text from the Research Paper:
Derivatives and Hedging Transactions" had the aim of increasing clarity in the way in which derivatives and hedging transactions are accounted for. The aim was to increase uniformity and ease  the interpretation of the accounts for stakeholders, increasing the perceptions of the risks that are involved with the requirement for companies to use a "fair market value" which must  be applied to all qualifying derivatives (Klein, 2001). SFAS 133 can also be seen as reducing the levels of inconsistency that have been manifest in banking, mortgage and similar companies  that have used datives as tools (Klein, 2001). To understand the impact that SFAS 133 has on accounts the impact on a single company may be examined; American Residential Investment  Trust, Inc. American Residential Investment Trust, Inc. are incorporated in the jurisdiction of Maryland. This is a company where the core business is a real estate investment trust, with  investments in mortgage securities and also in mortgage loans. The adoption of SFAS 133 has impacted on this company in the accounts after January 2001, as this was the date  of adoption for this company. Unlike others there appears to have been little preparation. Now we know what SFAS 133 is and who the company is, the impact may be  ascertained. The accounts that were prepared January 2001 use SFAS 133, which means that the changes in the valuation of derivatives due to the need to use the fair  market value. This is realized within the income statement, also known as the profit and loss account, as well as the balance sheet.  The reason that there is an impact is due to the way American Residential Investment Trust, Inc. assessed its derivates according to the hedging requirements of SFAS 133. They judged