UPDATE 3-Massachusetts, Goldman in $60 mln subprime accord

* Settlement includes payment, homeowner relief

* First settlement with securitizer of mortgages (Adds attorney general quotes, details, byline)

By Scott Malone

BOSTON, May 11 (Reuters) - Goldman Sachs Group Inc (GS.N: Quote, Profile, Research) agreed to pay up to $60 million to settle a Massachusetts probe into whether its subprime mortgage securitization business had encouraged unfair loans, state officials said on Monday.

Goldman did not write mortgages but contributed to demand for the riskiest home loans by securitizing them -- buying mortgages, packaging them and reselling them, Attorney General Martha Coakley told reporters. This is the first such settlement with a subprime mortgage securitizer, she said.

"There is no dispute that Goldman Sachs and other securitizers have been involved intricately in this whole process by which loans were made to homeowners who were destined to fail," Coakley said. "Many of these loans were unfair; they were destined to fail."

Goldman will work on renegotiating the terms of existing subprime mortgages with Massachusetts homeowners who are having trouble making payments -- and whose home values have fallen below their loan amounts -- but who have not yet suffered foreclosure.

It will make up to $50 million in concessions to homeowners and pay another $10 million to the state, Coakley said. No lawsuit was filed as part of the inquiry.

Goldman spokesman Michael DuVally said the company was "pleased" to have settled the matter.