To establish a value on the security you would have to locate a buyer, agree to a price, and SELL the security. Then there would be a value...But wait there wouldn't be a value for the new owner...You see in order to establish a value on the security the new owner would have to locate a buyer, agree to a price, and SELL the security. Then there would be a value...But wait no there be a value for the new owner...You see in order to establish a value on the security you would have to locate a buyer, agree to a price, and SELL the security. Then there would be a value....But there wouldn't

Ok I think you get the idea... The problem is: The new accounting standards don't allow you to use historical cost to establish a value on a Security...

And not all "securities" are stocks and bonds that are traded on a public exchange... They are more like land in that they are each individual and completely unique debt instruments... Only they are not like land, becuase there are no comparables to go by in assessing a valuation.

So how do you value them?

Note: Mortgage backed securities are a big part of this problem; however, they are not the only securitized paper out there that doesn't trade in a public or even private but active bond market.

Your mortgage is a type of security...It can be traded/bought/sold/etc... and a value can PROBABLY be reasonably estimated because we know how likely you are to default based on your credit score and other information that is available about you and there are probably many willing buyers of similar mortgages...But there are many, many other type of securities that cannot be as accurately or easily valued.