Massachusetts Attorney General Martha Coakley has announced that RBS Financial Products Inc., a subsidiary of the Royal Bank of Scotland, has agreed to pay $52 million as part of a settlement relating to its role in the collapse of the subprime mortgage market.
‘The securitization of subprime loans by investment banks is a major cause of the economic crisis,’ says Coakley. ‘Investment banks profited handsomely from those securitizations at the expense of homeowners. The only way we are going to return to a healthy economy is to hold these banks accountable in order to achieve real relief for homeowners. Today is another important step in those efforts for Massachusetts.’
According to Coakley, RBS Financial Products will pay out more than $40.2 million that will be used for principal reduction and related relief for more than 700 Massachusetts subprime borrowers. Furthermore, the company will pay more than $8.9 million directly to the Massachusetts state government and more than $2.6 million to compensate state ‘sub-entities,’ including municipalities that were ‘most acutely affected by foreclosures of the RBS securitized loans.’