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Barclays to Pay $36.1 Million in Massachusetts Subprime Settlement

reuters.com | September 10, 2013

By Jonathan Stempel

(Reuters) - Barclays Plc (BARC.L) agreed on Monday to pay $36.1 million to settle charges by Massachusetts that it hurt homeowners there by packaging subprime mortgages that the borrowers could not afford, and which violated state law, into securities.

The British bank is the fourth big bank to settle probes by Massachusetts into securitization practices, according to state Attorney General Martha Coakley, who announced the settlement.

Earlier settlements included $60 million by Goldman Sachs Group Inc (GS.N) in May 2009, $102 million by Morgan Stanley (MS.N) in June 2010 and $52 million by Royal Bank of Scotland Group Plc (RBS.L) in November 2011, Coakley said.

The securitization of home loans that quickly soured amid the U.S. housing downturn was a factor that contributed to the 2008 global financial crisis. While much of the subsequent regulatory scrutiny has occurred at the national level, many U.S. states have pursued their own probes as well.

Massachusetts said that from late 2005 through 2007, Barclays financed and packaged adjustable-rate mortgages made by subprime lenders such as Fremont, New Century, Option One and WMC Mortgage that were "presumptively unfair" under state law.

The state said these loans were unfair because the lenders did not reasonably believe that borrowers could afford them. It said the loans saddled borrowers with too much debt, teased them with low initial rates that would quickly rise, and imposed substantial penalties for necessary refinancings.

"The troubling practices of these Wall Street securitization firms greatly contributed to the economic crisis that harmed Massachusetts residents," Coakley said in a statement.

Barclays did not admit or deny the charges, and a spokesman said the bank is pleased to resolve the matter.

Roughly $26.2 million of the settlement funds will help borrowers reduce principal and obtain other relief, while the rest will go to the state, municipalities, and non-profit organizations that assist with foreclosure relief.

The case is Massachusetts v. Barclays Bank Plc, Superior Court of Massachusetts, Suffolk County, No. 13-3202.


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CFLA was founded by the Nation's Leading Foreclosure Defense Attorneys back in 2007 to serve the Foreclosure Defense Industry and fight pervasive Bank Fraud. Since opening our virtual doors, CFLA has rapidly expanded to become the premier online legal destination for small businesses and consumers. But as the company continues to grow, we're careful to hold true to our original vision. For us, putting the law within reach of millions of people is more than just a novel idea—it's the founding principle, just ask Andrew P. Lehman, J.D.. With convenient locations in Houston and Los Angeles, you can contact Our National Account Specialist and General Manager / Member Damion W. Emholtz at 888-758-2352 for a free Mortgage Fraud Analysis or to obtain samples of work product, including cutting edge Bloomberg Securitization Audits, Litigation Support, Quiet Title Packages, and for more information about our Nationally Accredited and U.S. Department of Education Approved "Mortgage Securitization Analyst Training Certification" Classes (3 days) 24 hours for approved CLE & MCLE Credit (Now Available Online).

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