GOLDMAN Sachs was hit by more US government action yesterday as it agreed to pay a fine and reform some of its mortgage management practices after wrongfully repossessing borrowers’ homes in 2009 and 2010.
The Federal Reserve said Goldman, through its former subsidiary, US mortgage lender Litton, had agreed to pay the unspecified fine over the “robo-signing” scandal, in which it signed over homes to be foreclosed without properly assessing each borrower’s case as required by law.
The Fed cited “a pattern of misconduct and negligence” at Litton in announcing its enforcement action against Goldman.
In a separate settlement with the New York Financial Services Superintendent, Goldman agreed to reform its foreclosure practices to forgive 25 per cent of mortgage loans for struggling homeowners who are 60 days in arrears on payments. It will also compensate some borrowers for wrongful foreclosures.
Goldman is selling Litton to Ocwen Financial for $264m (£162m). Goldman bought Litton in 2007 for $430m in a bid to gain more information about the sub-prime mortgage market, but it has become a money-losing thorn in Goldman’s side.
Goldman agreed to sell Litton to Ocwen in June.