Bank settles subprime loans case for $52m
Deal will aid 700-plus struggling homeowners
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.
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.’’
An spokesman said RBS was “pleased to have resolved this matter.’’
RBS Financial Products was once known as Greenwich Capital Financial Products Inc. Royal Bank of Scotland is also the parent of Citizens Bank, which was not involved in yesterday’s settlement.
The agreement, filed in Suffolk Superior Court, includes $40.2 million to provide mortgage relief for more than 700 homeowners with subprime loans, $8.9 million that will go to the state, and $2.6 million earmarked for communities and others most affected by foreclosures linked to the troubled loans.
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