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

(Reuters) – Royal Bank of Scotland Group Plc will pay $125 million to fix claims that it made misstatements while selling mortgage-backed securities to two big California pension funds, the state’s lawyer general said on Friday.

The settlement announced by California Chief law officer Xavier Becerra was the most recent by RBS targeted at dealing with claims stemming from its sale of mortgage-backed securities, which were at the heart of the 2008 monetary crisis.

Becerra’s workplace said those securities were typically backed by countless mortgage of differing quality in which the purchaser counted on the assurance that those home loans were thoroughly evaluated and were not overly risky.

RBS did not immediately react to an ask for remark.

Becerra’s office likewise said its examinations discovered that RBS stopped working to properly disclose to financiers the true characteristics of many of the thousands of mortgages underlying the securities.

The probe also discovered 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 stated.

“RBS decided to mislead California’s pension funds in order to line its own pockets– plain and basic,” Becerra said in a declaration.

The settlement comes as RBS continues to seek to fix a U.S. Justice Department examination into its sales of mortgage-backed securities prior to the financial crisis.

In July, RBS agreed to pay $5.5 billion to fix a lawsuit by the Federal Housing Finance Agency, the conservator for Fannie Mae and Freddie Mac, declaring that it misinformed the U.S. home mortgage giants into buying mortgage-backed securities.

In September 2016, the U.S. National Cooperative credit union Administration announced that RBS had actually consented to pay $1.1 billion to fix claims over mortgage-backed securities it offered to credit unions that later on stopped working.

Reporting by Nate Raymond in Boston; Modifying by Sam Holmes




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