RBS to pay US$125 million to settle California mortgage bond claims

RBS to pay US$125 million to settle California mortgage bond claims

People walk past a branch of the Royal Bank of Scotland in London, Britain December 1, 2017. REUTERS/Peter Nicholls
REUTERS: Royal Bank of Scotland Group Plc will pay US$125 million to resolve claims that it made misrepresentations while selling mortgage-backed securities to two large California pension funds, the state's attorney general said on Friday.The settlement announced by California Attorney General Xavier Becerra was the latest by RBS aimed at resolving claims stemming from its sale of mortgage-backed securities, which were at the heart of the 2008 financial crisis.Becerra's office said those securities were typically backed by thousands of mortgage loans of varying quality in which the buyer relied on the assurance that those mortgages were carefully screened and were not overly risky.RBS did not immediately respond to a request for comment.Becerra's office also said its investigations found that RBS failed to accurately disclose to investors the true traits of many of the thousands of mortgages underlying the securities.The probe also found that those misrepresentations led to millions of dollars in losses to the California Public Employees' Retirement System and the California Public Employees’ Retirement System, Becerra's office said.
"RBS decided to mislead California's pension funds in order to line its own pockets - plain and simple," Becerra said in a statement.The settlement comes as RBS continues to seek to resolve a U.S. Justice Department investigation into its sales of mortgage-backed securities before the financial crisis.In July, RBS agreed to pay US$5.5 billion to resolve a lawsuit by the Federal Housing Finance Agency, the conservator for Fannie Mae and Freddie Mac, claiming that it misled the U.S. mortgage giants into buying mortgage-backed securities.In September 2016, the U.S. National Credit Union Administration announced that RBS had agreed to pay US$1.1 billion to resolve claims over mortgage-backed securities it sold to credit unions that later failed.
(Reporting by Nate Raymond in Boston; Editing by Sam Holmes)
Source: Reuters
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