FORECLOSURE FRAUD AND THE $25 BILLION NATIONAL MORTGAGE SETTLEMENT
The record $25 Billion Dollar National Mortgage Settlement Agreement signed earlier this year involved 5 big lenders. According to recent reports, the Federal Reserve is now adding another 8 to the list.
According to officials 8 firms will be faced with fines and penalties due to flaws and irregularities. They include the following:
- PNC Financial Services
The addition on Goldman Sachs was surprising to many considering Goldman Sachs never played a major role in the mortgage processing industry. Goldman Sachs, actually, sold its loan processing unit (called Litton Servicing Loan LP) to Ocwen Financial Corp. in 2011 for about $264 million (after a $200 million write-off, loss taken by GS).
After the country’s downfall, Goldman Sachs was actually one of the firms thought to be unscathed in the foreclosure crisis. Other firms that did sink in the crisis either disappeared or were penalized (like Lemah Brothers and Bear Sterns or the Big Five). Goldman Sachs actually continued to turn in staggering profits with merely any legal trouble from feds or state governments.
Goldman Sachs did leave itself “open to future penalties” and fines due to its role in creating wrongful foreclosure properties across the country when it sold Litton Loan Servicing. This leaves a case open to penalties that may come close to – but probably not meet or exceed- the fines against JPMorgan Chase, et al., in the original agreement.
How much are these eight (8) firms expected to pay in fines, write downs, and other credit obligation? The Big Five, each, owed on average about $5 billion. These eight (8) firms though are much smaller (by revenue and total assets), so the amount of money would be exponentially less. Also the percentage of wrongful foreclosed homes caused by these eight firms is no-where near the amount of wrongful foreclosure caused by the Big Five, which is by these firms were not targeted earlier.
Ray Garcia, Esq.
Board certified in Real Estate Law
By the Florida Bar