Goldman Sachs Faces Mortgage Debt Class-Action Lawsuit Over Misleading Investors

Feb 3 (Reuters) - Goldman Sachs Group Inc 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 $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. (Reporting By Jonathan Stempel; Editing by Phil Berlowitz)

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Source: Huff 
Author: Reuters