Sunday, December 4, 2011

Massachusetts AG Scores $52M Lawsuit Settlement Alleging Securitized Subprime Home Loans Were 'Presumptively Unfair'

In Boston, Massachusetts, The Boston Globe reports:

  • A Royal Bank of Scotland subsidiary will pay $52 million to settle claims related to its role in the state’s “subprime mortgage meltdown,’’ Attorney General Martha Coakley said yesterday, an agreement that will benefit more than 700 borrowers in Massachusetts.

  • RBS Financial Products Inc. agreed to the payment after the state determined that the company financed, bought, and bundled residential mortgage loans into securities that were “presumptively unfair,’’ Coakley’s office said.

  • Such subprime loans proved costly for consumers and were often approved for people who were not qualified borrowers, the state said. The RBS deal marks Coakley’s third major settlement with investment firms over how they packaged and sold home loans. Morgan Stanley and Goldman Sachs Group also agreed to settlements that totaled $162 million over the past two years.

  • The securitization of subprime loans by investment banks is a major cause of the economic crisis,’’ Coakley said in a statement. “The only way we are going to return to a healthy economy is to hold these banks accountable in order to achieve real relief for homeowners.’’

For more, see Bank settles subprime loans case for $52m (Deal will aid 700-plus struggling homeowners).

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