A unit of the Royal Bank of Scotland has agreed to settle allegations that it misrepresented the quality of residential mortgage-backed securities to investors prior to the financial crisis.

RBS Financial Products Inc. allegedly sold the securities in 2006 and 2007 even though due diligence vendors warned it that many of the loans did not meet its own guidelines.

In addition, a number of the securitized mortgages had loan-to-value ratios in excess of 100 percent, while many of the loans had no due diligence performed on them.

Source: Mortgage Daily