RBS may be sued by US over home loan losses

ROYAL Bank of Scotland is bracing itself for possible inclusion among a list of international banks being sued by the United States government over mortgage-backed securities they sold which lost value in the collapse of the housing market.

Lawsuits are expected, accusing them of bundling subprime home loans into bonds that should never have been sold to investors and causing mortgage giants Fannie Mae and Freddie Mac to lose billions.

It has been reported that the FHFA will file lawsuits by Tuesday, before a three-year deadline to file cases expires.

A number of major banks face potential pay-outs of tens of billions of dollars to settle regulatory charges of abusive mortgage lending and foreclosure practices, and other investor lawsuits over mortgage debt losses.

These would reduce earnings and weaken capital levels, perhaps harming the ability of banks to lend money and provide life to a stalled housing market and weakened economy.

Sources have declined to name the banks to be sued, but they are said to include Bank of America, JPMorgan, Deutsche Bank and Goldman Sachs.

An RBS source declined to comment, but the bank is subject to other possible legal action in the US.