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Barclays to pay £23m in subprime mortgage meltdown probe
by Dylan Lobo on Sep 10, 2013 at 07:55
Barclays Bank has agreed to pay $36.1 million (£23 million) to settle allegations that it financed, purchased, and securitised residential loans that were presumptively unfair under Massachusetts law.
The settlement, announced by Attorney General Martha Coakley, follows the state's investigation into investment banks' securitisation practices.
It also comes after similar settlements with Morgan Stanley, Goldman Sachs, and the Royal Bank of Scotland (RBS), which have recovered more than $250 million in connection with securitisation claims, assisting thousands of homeowners across the state.
'The troubling practices of these Wall Street securitisation firms greatly contributed to the economic crisis that harmed Massachusetts residents,' Coakley said in an overnight statement. 'Today’s settlement with Barclays will help keep hundreds of people in their homes and recover more than $25 million in significant relief for borrowers who are still struggling with unsustainable subprime loans.'
The settlement relates to more than 450 Massachusetts subprime Barclays customers borrowers in Boston, Brockton, Lawrence, Lowell, Lynn, New Bedford, Springfield, and Worcester.
These borrowers are said to have had loans securitised by Barclays in 2006 and 2007 that carried a combination of high risk features, including introductory 'teaser' interest rates, high debt-to-income ratios and high loan-to-value ratios.
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