On the heels of an agreement with New York’s banking department, Goldman Sachs was hit with a federal regulatory action over foreclosure practices at its former subsidiary.
Earlier today, New York’s Department of Financial Services and Banking Department announced an agreement with Goldman Sachs Bank that requires the New York-based company to write down $53 million in principal on New York mortgages. The agreement was required in order for The Goldman Sachs Group Inc. to complete the sale of Litton Loan Servicing LP to Ocwen Financial Corp.
This afternoon, the Federal Reserve Board disclosed that a consent order was issued against the Goldman Sachs Group and Goldman Sachs Bank USA.
The formal enforcement action seeks to address “a pattern of misconduct and negligence” tied to servicing and foreclosure processing at Litton — which was sold to Ocwen today.
The order requires Goldman to retain an independent consultant to review Litton’s foreclosure proceedings that were pending at any time in 2009 or 2010.
“The review is intended to provide remediation to borrowers who suffered financial injury as a result of wrongful foreclosures or other deficiencies identified in a review of the foreclosure process,” the Fed’s statement said. “The foreclosure review will be conducted consistent with the reviews currently underway at the 14 large mortgage servicers that consented to enforcement actions brought by the banking agencies on April 13.”
Goldman will be subject to similar requirements outlined in the enforcement actions if it re-enters the mortgage servicing business while the consent order is still in effect.
In addition, Goldman has agreed to satisfy any civil money penalty that the Fed could have assessed against Litton for its conduct.
Related:
Goldman Agrees to Write Down Principal
As a condition of selling its mortgage servicing subsidiary, Goldman Sachs has entered an agreement that requires it to write down principal on New York mortgages. The agreement also calls for the subsidiary to stop using faulty foreclosure affidavits and compensate borrowers who have been harmed by the affidavits.
