CARSON CITY, Nev. (Legal Newsline) - Nevada Attorney General Catherine Masto has announced an $11.5 million assurance of discontinuance with a loan securitizer that allegedly engaged in deceptive mortgage lending and sales practices.
DB Structured Products Inc. funded, bought and securitized subprime and Alt-A loans between 2004 and 2007. The settlement was part of Masto's inquiry into potential misrepresentations by lenders, including Mortgage IT, American Home Mortgage and New Century, to Nevada consumers who took out the loans. DB allegedly failed to practice due diligence when buying the loans and assisted the deceptive lenders by financing and buying the loans.
"I remain committed to enforcing Nevada's laws against the players - including those on Wall Street - that contributed to and profited from mortgage lending and sales practices that misled Nevada consumers into loans that they did not understand and could not repay," Masto said. "The payment from DB will help alleviate some of the injury to Nevada consumers and the changes to its securitization process should help make sure that we do not go down this road again."
Under the terms of the agreement, DB will pay $11.5 million to the state to be used to pay affected borrowers, fund mortgage fraud enforcements and pay the costs of the inquiry. DB must always change its policies going forward. As part of the agreement, DB will only purchase, finance or securitize Nevada subprime mortgage loans after engaging in a review of such loans and ensuring they comply with the Nevada Deceptive Trade Practices Act and will not securitize a loan if it has reason to believe the lender disclosed multiple risk factors to consumers.
Since the housing crisis, Masto's office recovered approximately $80 million from banks that funded and purchased deceptively originated mortgage loans.