A May 11, 2009 Investment News article reports Massachusetts Attorney General Martha Coakley yesterday announced a $60 million settlement with The Goldman Sachs Group Inc. as part of a continuing investigation into investment banks’ role in securitizing subprime-mortgage loans. Her office had already been investigating foreclosure schemes and predatory lending.
In this industrywide investigation, courts in Massachusetts have determined that “not only were the loans themselves unfair but they were destined to fail at their inception,” Ms. Coakley said at a press conference.
Of the $60 million settlement, $50 million will go toward helping some 714 Massachusetts homeowners whose mortgages are either still performing or who are significantly delinquent – but not those who have already lost their homes to foreclosure.
As part of the settlement, New York-based Goldman will agree to principal write-downs of 25% to 30% for first mortgages and upward of 50% for those with a second mortgage, if the individuals want to refinance or sell their homes.
Those who are significantly delinquent will be required to make manageable payments toward their mortgages until they can refinance or sell their homes.
Finally, if a homeowner is unable to sell, Goldman has agreed to assist qualified borrowers with refinancing options and other alternatives to foreclosure, Ms. Coakley said.
Homeowners holding loans with Goldman entities will also get immediate assistance as will the thousands who are being serviced by Litton Loan Servicing LP, Goldman’s Houston-based servicer of subprime mortgages, she added.
The homeowners who modify their terms won’t be subject to litigation.
Goldman itself isn’t an originator of the loans, but it was a player in the securitization process.
The remaining $10 million of the total settlement will go toward the Commonwealth of Massachusetts.
Ms. Coakley stressed that this settlement isn’t part of a court procedure and that Goldman didn’t admit that it was culpable – nor did the office ask it to admit wrongdoing.
Rather, Goldman and the attorney general’s office agreed on a “best efforts”
proposal, which doesn’t have specific mandates for the bank but ensures cooperation with the office, she said.
Ms. Coakley noted that her office believes that Goldman that the bank would uphold its end of the agreement and cooperate.
Michael DuValley, a spokesman for Goldman, said that the firm is pleased to have resolved the matter.
If you believe you have lost money due to investments involving subprime mortgage pools, please contact our office for a free case evaluation.