Most warehouse lenders think that net worth calculations for mortgage banking firms are incorrect because of the way that locked pipelines are valued. The correction of the calculations could significantly impact the reported net worth of companies.

Generally Accepted Accounting Principles require that everyone follows the same accounting rules. GAAP financials are produced for the benefit of users of financial statements, whom I will refer to in this foreword as Readers. Readers can include Fannie Mae, Freddie Mac and Ginnie Mae as well as secondary market investors, warehouse banks and for public companies. In addition, the category can include the Securities and Exchange Commission and the investing public.

GAAP is a good thing because it provides for comparability across an industry, across the country, or even around the world.

Source: Mortgage Daily