Subprime case a 'landmark,' expert says

May 12, 2009 at 4:31 PM

BOSTON, May 12 (UPI) -- A Goldman Sachs settlement over its role in the subprime mortgage market collapse in Massachusetts is a "landmark case," a mortgage finance expert said.

"This is a landmark case. It is one of the few times we've seen somebody who didn't actually originate the loans being held accountable," said Guy Cecala, the chief executive of Inside Mortgage Finance, The Boston Globe reported Tuesday.

Cecala said the case, in which Goldman Sachs agreed to a $60 million settlement, was a "significant precedent."

"If Massachusetts can do it with Goldman Sachs, who else can they do it with?" Cecala asked.

While Goldman Sachs did not originate the loans, it played a hand in keeping the market open by buying bundled loans, known as securities, which funded more loan activity, the Globe said.

As the market collapsed, the loans were viewed as unfair.

"We've made the determination, and our courts have agreed, that many of these loans were unfair. They were destined to fail," said state Attorney General Martha Coakley. "Our focus is on trying to get relief for homeowners and for Massachusetts."

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