Goldman Sachs Group Inc. has agreed to pay $60 million in fines and reductions in loan principal for subprime borrowers after a probe into how major investment banks are involved in writing loans to borrowers with poor credit, the Massachusetts attorney general said Monday.

Attorney General Martha Coakley said she was pleased that Goldman had cooperated during the investigation and that it had committed itself to help borrowers in the state who are struggling with "unsustainable subprime loans."

The settlement includes a $10 million payment to Massachusetts and $50 million in relief to subprime borrowers in the state.

Goldman's agreement is the first with a major U.S. investment bank related to its dealings in subprime mortgages.

Coakley sought the settlement after an investigation, which is continuing, into the role of investment banks in securitizing pools of subprime mortgages. A spokeswoman for the attorney general said earlier Monday that the agreement succeeds previous settlements with loan originators.

Her office is continuing to investigate "the deceptive marketing of unfair loans" in Massachusetts, Coakley said.

Foreclosures tied to subprime loans — mortgages made to borrowers with sketchy credit histories — are expected to increase sharply, further pressuring already weakened U.S. housing markets.

The attorney general's office said Goldman has agreed to reduce the principal of first mortgages by 25% to 35% and second mortgages by 50% or more. Borrowers whose first mortgages are "significantly delinquent" must make a reasonable monthly payment while seeking to refinance or sell their homes. Borrowers who are unable to sell their homes after six months will have their principal reduced by Goldman.

Subprime loans and the mortgage-backed securities they contained were a key cause of the national economic recession as rising loan delinquencies and uncertainty about the securities' value created billions of dollars of losses. Property values also tanked, trimming billions of dollars of wealth from consumers' balance sheets.

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