Goldman face mortgage class action suit
03/02/2012 at 17:13
Goldman Sachs was ordered by a federal judge to face a securities class-action lawsuit accusing it of misleading investors about a 2006 offering of securities backed by risky mortgage loans from a now-defunct lender.
U.S. District Judge Harold Baer in Manhattan certified a class-action lawsuit by investors in the GSAMP Trust 2006-S2, a dollar 698 million offering of certificates based on a pool of second-lien home mortgages.
The underlying loans were made by New Century Financial Corp, a subprime mortgage specialist that went bankrupt in 2007.
Plaintiffs in the lawsuit said New Century ignored its own underwriting standards and used improper appraisals when making the loans, and Goldman failed to conduct adequate due diligence when it bought the loans and packaged them into securities
Baer's decision is dated Feb. 2. C Reuters