After the state of Connecticut claimed that the Royal Bank of Scotland misrepresented the quality of mortgages backing residential mortgage-backed securities immediately preceding to the financial crisis, RBS agreed to pay $120 million to settle those claims, reports HousingWire staffer Ben Lane.

From January 2005 to December 2008, RBS served as the lead underwriter for approximately 250 RMBS deals valued at $250 billion, according to an announcement from Connecticut Attorney General George Jepsen and state Department of Banking Commissioner Jorge Pérez.

In its role as lead underwriter, RBS was required to conduct due diligence on the pools of loans that backed its RMBS deals. Per the announcement from Jepsen and Pérez, Connecticut accused RBS of using an “inadequate” due diligence process before the crisis, which then led to RBS making “omissions and misstatements” in the representations made to the public and investors about the securities.

Read more >