Illinois AG Announces Settlement with Bank over Alleged Misconduct with RMBS

The Illinois Attorney General Lisa Madigan recently announced Illinois’ eighth settlement in a series of settlements with large financial institutions over the sale of residential mortgage-backed securities (RMBS) before the 2008 economic crisis.  This latest settlement, with a large international bank, is for $20 million dollars.

The settlement concludes an investigation into the bank’s alleged “misconduct in its marketing and sale of risky residential mortgage-backed securities.”  The investigation is reported to include reviews of mortgage securitizations issued or underwritten by one of the bank’s subsidiaries.  The agreement does not include an admission of liability by the bank but is reported to allege inaccuracies in the “offering documents for certain of the securitizations” pitched to investors.  The agreement reportedly reads, “To date, the loan pools backing the securitizations have suffered billions of dollars of collateral losses.  As a result, some investors have experienced shortfalls in principal and interest payments, as well as declines in the market value of their certificates.”