UBS agreed to pay $230 million to settle the investigation of the New York Attorney General’s Office into its marketing and issuance of residential mortgage-backed securities (RMBS) before the financial crisis.
The settlement includes $189 million in consumer relief for New York homeowners and $41 million for the state government.
As part of the settlement, UBS admits the results of the investigation. The AG’s found that the financial services company used inaccurate information to sell RMBS to investors. Many of its mortgage loans did not comply with underwriting guidelines or applicable laws and regulations.
Additionally, the loan pools backing the securities securitizations suffered billions of dollars of collateral losses. As a result, investors incurred shortfalls in principal and interest payments. The market value of their certificates declined.
UBS is the seventh large financial firm to settle with New York AG
Furthermore, the AG’s Office found that UBS’ origination of securitized mortgage loans has serious problems. The loans defaulted shortly after issuance. Although the bank knew about the problems, it continued to buy and securitize risky loans from the same originators.
