Agreements to sell or transfer mortgage servicing rights may contain protection provisions that could affect the amount ultimately paid to the seller. For example, the seller may agree to adjust the sales price for loan prepayments, defaults, or foreclosures that occur within a specified period of time. Most of the agreements also contain representation and warranty provisions covering eligibility defects discovered within specified time periods. Issue No. 89-5, "Sale of Mortgage Loan Servicing Rights, " addressed the question of when a sale of mortgage loan servicing rights could be recognized. The Task Force reached a consensus that a sale should not be recognized before the closing of the sale, which was defined as when title and all risks and rewards have irrevocably passed to the buyer and there are no significant unresolved contingencies
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