UBS Settles NY Mortgage Securities Case for $230 Million

John Jordan | March 2018

New York State Attorney General Eric T. Schneiderman

NEW YORK—New York State Attorney General Eric T. Schneiderman announced today (March 21) a $230-million settlement with UBS in connection with its packaging, marketing and issuance of residential mortgage-backed securities to investors prior to the housing crisis in 2006.

The settlement includes $189 million worth of consumer relief for New York homeowners and communities and $41 million in cash to New York State.

The New York State Attorney General alleges that UBS sold investors RMBS-backed by mortgage loans based on “inaccurate statements in prospectus supplements and/or investor presentations for the RMBS.” The AG further states that many of the mortgage loans did not comply with underwriting guidelines or applicable laws and regulations.

“The loan pools backing the securitizations suffered billions of dollars of collateral losses, causing investors to experience shortfalls in principal and interest payments, as well as declines in the market value of their certificates,” the Attorney General stated in a press announcement of the settlement agreement.

“Years later, New Yorkers are still recovering from the housing crash, as communities grapple with the effects of plummeting home values, vacant properties, and an affordable housing crisis,” said Attorney General Schneiderman. “Today’s settlement marks another key step forward as New Yorkers rebuild their lives and communities. The dollars we’ve secured have funded critical housing programs across New York—and this settlement means even more community revitalization work in the years to come.”

UBS is the seventh large financial institution to settle with Attorney General Schneiderman’s office since he was appointed co-chair of the RMBS Working Group by President Obama in 2012. Attorney General Schneiderman has now secured $3.93 billion in cash and consumer relief for New Yorkers in the aftermath of the residential mortgage crisis — more than any other state. When combined with the National Mortgage Settlement, the total rises to $6.06 billion.

“I applaud Attorney General Schneiderman’s true and lasting commitment to the recovery of communities across New York crippled by the financial crisis,” says Madeline Fletcher, executive director, Newburgh Community Land Bank. “In our work as land banks, these funds have exponentially enhanced our impact as we address blight, revitalize neighborhoods and continue to improve the quality of life of thousands of New Yorkers. We are so grateful for his continued support and visionary leadership.”

 

John Jordan
Editor, Real Estate In-Depth