NY Approves Goldman Sachs' Sale of Litton with Stipulations
By: Krista Franks
The New York Department of Financial Services and Banking Department is including several stipulations with its approval of Goldman Sachs’ sale of its Litton Loan Servicing, LP, to special servicer Ocwen Financial Corp.
The acquisition – approved Thursday with the signing of the agreement – makes Florida-based Ocwen the 12th largest servicer in the country.
Goldman Sachs has agreed to principal reductions of $53 million on Litton mortgages.
In addition, the agreement forged between Goldman Sachs and New York’s banking superintendent Benjamin M. Lawsky addresses the illegal practice of robo-signing and requires enhanced rules to ensure only the note-holder take any foreclosure actions on homeowners.
The agreement also requires servicers to provide a single point of contact to borrowers in foreclosure or those seeking modification.
The single point of contact is a common practice among special servicers and is already a requirement for all
“This agreement provides important consumer protections for homeowners who have found themselves in dire straits due to the financial crisis,” Superintendent Lawsky said.
“Our agreement sets a new higher standard for the residential mortgage servicing industry, whose troubling foreclosure and servicing practices we have been investigating along with other regulators across the country,” Lawsky continued.
“Goldman Sachs, Ocwen and Litton have now all agreed to put the rights of homeowners ahead of their profit margins by implementing these changes,” Lawsky concluded.
On the same day as Lawsky’s announcement of his agreement with Goldman Sachs, the Federal Reserve Board announced its own set of requirements for the investment bank.
Responding to past iniquities in its mortgage servicing, the Fed is requiring Goldman Sachs to employ an independent party to review Litton’s foreclosure actions between 2009 and 2010.
“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, 2011,” the Fed said in its announcement.
In addition, if Goldman Sachs chooses to service mortgages at any time while the enforcement actions are still in effect, it must adopt the same rules as the other servicers in question.
Goldman Sachs will also be required to pay monetary penalties.
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