The agreement, which New York financial services superintendent Benjamin Lawsky reached with Goldman and Ocwen Financial Corp, contains several measures to strengthen the oversight of foreclosure proceedings.
A chief focus of the superintendent’s agreement, which was announced on Thursday, was putting an end to a practice known as “robosigning,” in which bank employees signed foreclosure documents without reviewing case files as required by law.
Goldman, Litton and Ocwen agreed to stop the practice, make new staffing and training requirements for employees handling foreclosures and withdraw pending foreclosure actions that are based on faulty paperwork.
Ocwen is in the process of buying Litton, a Houston-based mortgage loan servicing business, for $264 million. The agreement will allow that deal to proceed, the superintendent’s office said. As a result of the robosigning pact, Lawsky agreed to issue a “no objection” letter to the deal.
The Ocwen-Litton combination will create the 12th largest mortgage servicer in the country, according to Lawsky’s office. Goldman said in a recent regulatory filing that it expects the deal to close by the end of the year.
Goldman bought Litton in 2007 for $430 million, hoping to glean more information about the subprime mortgage market to help its trading business. In recent years, it has become a money-losing thorn in Goldman’s side.
The bank began considering a sale of Litton late last year, as the mortgage market continued to suffer losses and state and federal regulators began investigating industry-wide foreclosure problems. Goldman wrote down the value of the business by $220 million in the first quarter.
In a quarterly filing on August 9, Goldman said Litton was facing probes by state attorneys general and banking regulators. A group of the nation’s largest banks are said to be working toward a settlement that could resolve some of those investigations and cost the industry billions of dollars.
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Category: Business/ Economy
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