As per the claims, the bank securitized loans from subprime originators such as Fremont, New Century, Option One, and WMC Mortgage Corp, wrapped up and sold them to the secondary market.
Commenting on the settlement, Massachusetts attorney general Martha Coakley said that the troubling practices of these Wall Street securitization firms greatly contributed to the economic crisis that harmed Massachusetts residents.
"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," Coakley commented.
Under the terms of the agreement, over 450 Massachusetts borrowers will benefit from reductions in the principal amount due on their loans, and foreclosure relief payments.
Barclays will provide more than $25m, which will be used for principal reduction and offer compensation to the Massachusetts subprime borrowers, while about $2m will be given to compensate the cities and towns most acutely affected by foreclosures of the securitized loans.
Further, the bank will give approximately $1m to non-profit organizations that are assisting with foreclosure relief efforts in Massachusetts, while over $7m to the Commonwealth.
As in similar enforcement actions, Coakley charged investment banks Morgan Stanley, Goldman Sachs, and the Royal Bank of Scotland (RBS), and recovered over $250m in connection with securitization of claims.
