Tags: Goldman | Fed | Foreclosure | Settlement

Goldman Said to Be Part of Fed-Led Foreclosure Settlement

Tuesday, 08 January 2013 04:21 PM EST

Goldman Sachs Group Inc., Morgan Stanley and two other banks may agree as soon as this week to settle claims over botched foreclosures in an accord similar to one reached with 10 loan servicers Monday, two people briefed on the discussions said.

The agreement, also involving HSBC Holdings Inc. and Ally Financial Inc., would end case-by-case reviews of foreclosures under earlier accords with the biggest mortgage servicers, said the people, who declined to be identified because the talks are private. The Federal Reserve-led discussions specified at least $1.5 billion in cash and assistance for borrowers, one of the people said.

Ten servicers agreed Monday to an $8.5 billion settlement with the Fed and the Office of the Comptroller of the Currency that ends the outside reviews in exchange for a deal that limits their costs to $3.3 billion in cash for foreclosures in 2009 and 2010 and $5.2 billion in other mortgage-related aid.

The settlement could bring the industry payout to $10 billion and expands beyond the 14 firms required to review foreclosures under the April 2011 agreement. IndyMac Bancorp’s successor OneWest Bank FSB and EverBank Financial Corp. have yet to reach settlements with regulators.

“We continue to have conversations with the servicers we regulate who were under April 2011 enforcement actions but were not part of the settlement,” said Bryan Hubbard, an OCC spokesman. OneWest, EverBank and HSBC are included, he said.

Market Collapse

Goldman Sachs bought Litton Loan Servicing LP in 2007 and Morgan Stanley bought Saxon Capital Inc. in 2006, before a housing market collapse that led to the worst financial crisis since the Great Depression. Litton initiated 135,586 foreclosure actions in 2009 and 2010, and Saxon initiated at least 60,313 actions in the same period, according to the Fed. Both New York- based banks later sold the servicers.

Morgan Stanley and Goldman Sachs were separately ordered by the Fed to hire outside consultants to conduct foreclosure reviews. Their case-by-case reviews paralleled those ordered in the April 2011 settlement.

Eric Kollig, a Fed spokesman, declined to comment on settlement talks. Mary Claire Delaney, a Morgan Stanley spokeswoman, and Michael DuVally, a Goldman Sachs spokesman, also declined to comment.

HSBC “remains in discussions” with regulators, according to Neil Brazil, a spokesman, who declined to comment further.

Residential Capital LLC, the unit of Detroit-based Ally involved in the settlement, supports the idea that bank funds “should go toward consumers rather than consultants,” and has been delayed consideration of the settlement because of its ongoing bankruptcy, said Susan Fitzpatrick, a bank spokeswoman.

“The ResCap Board of Directors will consider the settlement proposal promptly” and talk with a panel representing unsecured creditors, she said in a statement.

Ocwen Financial Corp. agreed to buy Saxon and Litton in 2011 as Goldman Sachs and Morgan Stanley separated themselves from the mortgage-servicing business.

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FinanceNews
Goldman Sachs Group, Morgan Stanley and two other banks may agree as soon as this week to settle claims over botched foreclosures in an accord similar to one reached with 10 loan servicers Monday, two people briefed on the discussions said.
Goldman,Fed,Foreclosure,Settlement
469
2013-21-08
Tuesday, 08 January 2013 04:21 PM
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