BOSTON (Legal Newsline) - Massachusetts Attorney General Martha Coakley announced a $36.1 million assurance of discontinuance on Monday with Barclays Bank PLC to resolve allegations of unfair securitization practices.
Barclays allegedly financed, purchased and securitized residential loans that were presumptively unfair under state law. The settlement with Barclays is part of an ongoing inquiry by Coakley's office to unravel the complex securitization process that facilitated the proliferation of subprime loans throughout the nation and contributed to the subprime mortgage meltdown.
In actions brought against Barclays, Morgan Stanley, Goldman Sachs and Royal Bank of Scotland, Coakley's office recovered more than $250 million related to securitization claims. The settlements funds will be used to help thousands of homeowners throughout Massachusetts.
"The troubling practices of these Wall Street securitization firms greatly contributed to the economic crisis that harmed Massachusetts residents," Coakley said. "Today's settlement with Barclays will help keep hundreds of people in their homes and recover more than $25 million in significant relief for borrowers who are still struggling with unsustainable subprime loans."
Under the terms of the assurance of discontinuance, Barclays will pay more than $25 million for principal reduction and related relief for more than 450 Massachusetts subprime borrowers, approximately $2 million to compensate the cities and towns most affected by foreclosures of Barclays securitized loans, approximately $1 million to non-profits assisting with foreclosure relief efforts in the state and more than $7 million to the state.
The borrowers eligible for the settlement funds are individuals who had loans securitized by Barclays in 2006 and 2007 with a combination of high-risk features, such as introductory teaser interest rates, high loan-to-value ratios and high debt-to-income ratios.
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Royal Bank of Scotland