The level of anxiety for individuals and businesses continues to increase as they experience losses in the value of their real estate assets. In some circumstances, the fair market value of their property has fallen below the amount of the loan or mortgage. As a result, many debtors decide to forgo the loan, resulting in the property being repossessed by the lender. As shown in Appendix A, default rates continue to rise (U.S.), affecting accounting issues such as revenue recognition, valuation, fair value, and depreciation. The presentation of long-term debt is one of the most controversial areas of financial reporting. » (Kieso, 709). This is because long-term debts such as loans for real estate investments have a significant impact on a company's cash flow. A company's cash flow is affected by long-term debt because gains and losses are recorded in an equity account, such as "Other Comprehensive Income" (investments). Cash flow is also affected by reporting the permanent impairment of an asset as a realized loss through profits and regulatory capital. Individuals and institutions involved in the current credit crisis include: the United States Congress, the Federal Reserve, Fannie Mae, Freddie Mac, the Department of Housing and Urban Development (HUD), the Securities and Exchange Commission (SEC ), credit agencies, banks, mortgage brokers and consumers (Carey, 2). The Financial Accounting Standards Board (FASB) is focused on the growing issues related to real estate reporting. In the real estate market, a home buyer (debtor) must first contact a financial institution or mortgage broker (originator) who will do so. approve and grant mortgage loans. Thereafter, the originator may choose to terminate the company's continued involvement in the transferred financial assets. Additionally, Statement 167 requires companies to provide additional information regarding invested entities, thereby enabling significant changes in risk exposure to be reported. The new accounting rules will regulate the real estate market. However, adjustments to business practices and respected capital levels will prevail over time. The accounting problems solving the real estate market will always exist. Accounting regulations are constantly updated to adapt to the ever-changing economy. The FASB and SEC will provide updated accounting rules that will affect the lender and the debtor. Whether the new accounting regulations are treated fairly among all parties involved; they must be carried out in all interrelated transactions.