S&P may pay $1.5 billion to settle mortgage rating lawsuit

New Home Sales Plunge 11.8%
MIAMI, FL - MAY 27: A "For Sale" sign sits in front of a new home May 27, 2004 in Miami, Florida. According to the Commerce Department new home sales in the United States suffered their largest monthly drop in 10 years in April as rising mortgage rates cooled the housing market from the previous month. New home sales fell 11.8 percent to a seasonally adjusted annual rate of 1.093 million units from an upwardly revised record high of 1.239 million in March. (Photo by Joe Raedle/Getty Images)
Photograph by Joe Raedle—Getty Images

(REUTERS) – Standard and Poor’s is in talks to pay as much as $1.5 billion to settle U.S. government lawsuits over mortgage ratings issued in the run-up to the 2008 financial crisis, a person familiar with the matter said on Tuesday.

The settlement of civil fraud litigation may be reached as soon as this month, two people familiar with the matter said.

S&P, a unit of McGraw Hill Financial (MHFI), is trying to resolve lawsuits filed by the U.S. Department of Justice and more than a dozen states that accused it of inflating credit ratings to win more business from issuers.

It had previously been expected to pay slightly more than $1 billion to settle, another person familiar with the matter told Reuters last week. The final amount could fluctuate as more states sign on, that person said.

In a civil fraud lawsuit filed in February 2013, the Justice Department claimed that investors lost billions of dollars after buying mortgage-backed debt whose risks had been misrepresented by S&P.

The government said insured institutions had suffered more than $5 billion in losses, and sought to recoup that amount from S&P.