In October 2010, the Division of Corporation Finance sent a comment letter to certain public companies as a reminder of their disclosure obligations to consider in their upcoming Form 10-Qs and subsequent filings, in light of continued concerns about potential risks and costs associated with mortgage and foreclosure-related activities or exposures.
The letter stated that companies should provide clear and transparent disclosure regarding their obligations relating to the various representations and warranties it made in connection with its securitization activities and whole loan sales. In addition, companies should discuss any implications of any foreclosure review, including potential delays in completing foreclosures, if applicable.
The staff noted that some of these issues are not limited to financial institutions that sold or securitized mortgages or mortgage-backed securities. Issuers that engage in mortgage servicing, title insurance, mortgage insurance, and other activities relating to residential mortgages should also consider the impact of these and similar issues for their disclosures.