Goldman Sachs, Ocwen Reach Accord With New York State to End Robo-Signing

Michael J. Moore Bloomberg.com 09/01/2011 08:35

A jogger passes in front of the U.S. Federal Reserve building in Washington, D.C., on Aug. 16, 2011.

Goldman Sachs Group Inc. (GS) agreed to pay future Federal Reserve penalties and write down $53 million of mortgage loans in New York to gain approval for its sale of Litton Loan Servicing LP.

The Fed ordered Goldman Sachs to conduct an independent review of Litton’s foreclosures in 2009 and 2010 to address a “pattern of misconduct and negligence,” the regulator said today in a statement. Litton’s sale to Ocwen Financial Corp. (OCN) was completed today after reaching accords with the Fed and New York state regulators, according to a Goldman Sachs statement.

Goldman Sachs leaves mortgage servicing after Litton was accused of robo-signing, in which foreclosure documents are signed by company officials who vouch for their accuracy without personally verifying the contents. The practice raised concern that some borrowers may have been wrongfully evicted and triggered calls for more staffing and oversight.

“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,” Benjamin Lawsky, superintendant at the New York State Department of Financial Services, said in a statement.

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