SEC Urges Banks to Disclose Potential Losses From Foreclosures

The U.S. Securities and Exchange Commission urged banks to disclose their expected losses from flawed foreclosure documents, as mortgage-bond investors demand refunds on billions of dollars of securities.

Lenders must disclose circumstances that they “reasonably expect” to have an “unfavorable impact” on financial results, the SEC said in a letter posted on the agency’s website today. The letter was sent because of “concerns about potential risks and costs associated with mortgage and foreclosure-related activities,” the SEC said.