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GE to pay $1.5B for misrepresentations concerning subprime loans

Jaclyn Jaeger | April 15, 2019

The Department of Justice on April 12 announced General Electric will pay a civil penalty of $1.5 billion to resolve claims under the Financial Institutions Reform, Recovery, and Enforcement Act involving subprime residential mortgage loans originated by WMC Mortgage, a GE subsidiary.

GE first announced in January 2019 that it had reached an “agreement in principle.” WMC, GE, and their affiliates allegedly misrepresented the quality of WMC’s loans and the extent of WMC’s internal quality and fraud controls in connection with the marketing and sale of residential mortgage-backed securities (RMBS). FIRREA authorizes the federal government to seek civil penalties for violations of various predicate criminal...

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