Accounting - Deferred Interest

I understand that as per FASB Statement(s), publicly traded corporations in the U.S. are permitted to publish their financial statements with deferred interest booked as actual revenue, even though as of the date financial statement, it has not been received and whether it will be received is not a certainty.

I understand that this FASB permitted accounting method is now being used in a big way by mortgage banks though it was not originally intended for mortgage banks.

Which FASB Statement permits this?

Can you provide any other information as to how mortgage bank were able to misleadingly inflate their earnings?