It stands excess servicing fee receivables; with respect to a pool of mortgages (mortgage loans)- and generally any type of financial assets, it is the purchase of the right to receive the underlying cash flows. In addition to purchased mortgage servicing rights (PMSR), it is part of capitalized servicing assets.

As a type of tangible assets, ESFR should be reevaluated regularly- at least quarterly- to reflect the impact of unanticipated prepayments of the underlying cash flows. In the process, these receivables must be written down to the present value of the estimated remaining future excess service fee revenues.

The discount rate applied to the calculation of the present value of the estimate future servicing fee income should be the same rate as that used to initially recognized the asset (i.e., at the time of initial recognition).