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NY A.G. Announces $500 Million Settlement With Royal Bank Of Scotland

Posted on March 7, 2018 at 6:30 PM

NY’s Attorney General Eric T. Schneiderman announced a $500 million settlement with Royal Bank of Scotland over the bank’s deceptive practices and misrepresentations to investors in connection with the packaging, marketing, sale, and issuance of residential mortgage-backed securities (RMBS) leading up to the financial crisis. The settlement includes $100 million in cash to New York State and $400 million worth of consumer relief for New York homeowners and communities.

The settlement requires RBS to:

• provide significant community-level relief to New Yorkers, including funds to spur the construction of more affordable housing;

• additional resources will be dedicated to helping communities transform their code enforcement systems, invest in land banks, and purchase distressed properties to keep them out of the hands of predatory investors; and

• be subject to an independent monitor who will be responsible for ensuring that targets under the settlement are met and that quarterly reports are made available to the public.

In settling, RBS admitted that:

• it sold investors RMBS backed by mortgage loans that, contrary to its representations, did not materially comply with underwriting guidelines;

• many of the mortgage loans did not comply with applicable laws and regulations, among other defects;

• ignored warnings from RBS’s diligence vendors that many of the loans that it purchased for securitization did not conform to underwriting guidelines, as RBS represented to investors; and

• it continued to purchase and securitize risky loans from the same originators, which it packaged and sold to unwitting investors.

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Categories: Fraud, Fair Dealing