Wells Fargo has agreed to pay $20m to Maryland to settle the dispute over its role in the financial crisis of 2007 and 2008, Attorney General (AG) Brian Frosh said.

The amount will be paid to the securities division of AG Brian Frosh, resolving the claims that the bank “misled investors in its issuance of residential mortgage-backed securities (RMBS)”.

In a press release, Frosh noted: “Wells Fargo allegedly misrepresented the quality of some of the loans backing its RMBS.

“This settlement will recoup losses that Maryland suffered through Wells Fargo RMBS investments while also providing additional funds for the state.”

Frosh said that Wells Fargo issued 119 RMBS between 2005 and 2009, backed mainly by prime mortgages with some riskier Alt-A and subprime mortgage loans.

Wells Fargo was supposed to disclose the fact that these securities were backed by the said loans, which are considered riskier to investors.

However, through a due diligence process commissioned by a third-party channel, the bank was made aware that its disclosures were inaccurate.

Wells Fargo neither searched the mortgage pools to identify and remove the non-compliant loans nor revised its disclosures to note that some loans did not comply with the origination standards, Frosh added.

Moreover, according to the press release, the company found that the stated income of its borrowers did not match with the records submitted to the Internal Revenue Service (IRS).

Frosh concluded saying that the company’s conduct directly contributed to the global banking crisis, triggering a recession.

Wells Fargo does not agree with the said claims made by the office of the AG.

In a statement, the bank said: “While we do not agree with the state’s view on these matters, we are pleased to be able to put these legacy issues behind us.”