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Federal Reserve in the Matter of the Goldman Sachs Group

Federal Reserve in the Matter of the Goldman Sachs Group

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Published by Foreclosure Fraud
4closureFraud.org
4closureFraud.org

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Categories:Types, Research, Law
Published by: Foreclosure Fraud on Sep 01, 2011
Copyright:Attribution Non-commercial

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04/02/2012

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UNITED STATES OF AMERICABEFORE THEBOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEMWASHINGTON DC.In the Matter of 
THE GOLDMAN SACHS GROUP,
INC.
New York, New York andGOLDMAN SACHS BANK USANew York, New York.Docket No.:11-112-B-HC.11-112-B-SM.
CONSENT ORDER
WHEREAS, The Goldman Sachs Group, Inc., New York, New York ("Goldman
Sachs"),
a registered bank holding company, owns and controls Goldman Sachs Bank USA, NewYork, New York (the "Bank"), a state-chartered bank that is a member of the Federal ReserveSystem, and the Bank until September 1, 2011 indirectly owned Litton Loan Servicing LP,Houston, Texas ("Litton");WHEREAS, prior to September 1, 2011, Goldman Sachs engaged in the business of servicing residential mortgage loans in the United States through Litton. Goldman Sachs,through Litton, serviced residential mortgage loans that are held in the portfolios of 
(a)
asubsidiary of the Bank; (b) the Federal National Mortgage Association, the Federal Home LoanMortgage Corporation, and the Government National Mortgage Association (collectively, the
"GSEs");
and (c) various investors, including securitization trusts pursuant to Pooling andServicing Agreements and similar agreements (collectively, the "Servicing Portfolio"). Goldman.PAGE BREAK.
 
Sachs,
through Litton, had substantial responsibilities with respect to the Servicing Portfolio forthe initiation and handling of foreclosure proceedings and loss mitigation activities ("LossMitigation" or "Loss Mitigation Activities" include activities related to special forbearances,repayment plans, modifications, short refinances, short sales, cash-for-keys, and deeds-in-lieu of foreclosure);WHEREAS, by virtue of 
its
indirect ownership of Litton, Goldman Sachs was the
23
rd
largest servicer of residential mortgages in the United States and serviced a portfolio of morethan 280,309 residential mortgage loans. During the recent financial crisis, a substantially largernumber of residential mortgage loans became past due than in earlier years. Many of the pastdue mortgages have resulted in foreclosure actions. From January 1, 2009 to December 31,
2010,
Litton initiated 135,586 foreclosure actions;WHEREAS, in connection with the process leading to certain foreclosures involving theServicing Portfolio, Goldman Sachs, through Litton, allegedly:(a) Filed or caused to be filed in state courts and in connection with bankruptcyproceedings in federal courts numerous affidavits executed by employees of Litton oremployees of third-party providers making various assertions, such as the ownership of the mortgage note and mortgage, the amount of principal and interest due, and the feesand expenses chargeable to the borrower, in which the affiant represented that theassertions in the affidavit were made based on personal knowledge or based on a reviewby the affiant of the relevant books and records, when, in many cases, they were notbased on such knowledge or review;(b) Filed or caused to be filed in courts in various states and in connection withbankruptcy proceedings in federal courts or in the local land record offices, numerous.
PAGE 2.
 
affidavits and other mortgage-related documents that were not properly notarized,including those not signed or affirmed in the presence of 
a
notary;(c) Litigated foreclosure and bankruptcy proceedings and initiated non-judicialforeclosures without always confirming that documentation of ownership was in order atthe appropriate time, including confirming that the promissory note and mortgagedocument were properly endorsed or assigned and, if necessary, in the possession of theappropriate party;(d) Failed to respond in a sufficient and timely manner to the increased level of foreclosures by increasing financial, staffing, and managerial resources to ensure thatLitton adequately handled the foreclosure process, and failed to respond in a sufficientand timely manner to the increased level of Loss Mitigation Activities by increasingmanagement and staffing levels to ensure timely, effective and efficient communicationwith borrowers with respect to Loss Mitigation Activities and foreclosure activities andfull exploration of Loss Mitigation options or programs prior to completion of foreclosureactivities; and(e) Failed to have adequate internal controls, policies and procedures, compliancerisk management, internal audit, training, and oversight of the foreclosure process,including sufficient oversight of outside counsel and other third-party providers handlingforeclosure-related services with respect to the Servicing Portfolio.WHEREAS, the practices set forth above allegedly constitute unsafe or unsound bankingpractices;WHEREAS, in connection with a horizontal review of various major residentialmortgage servicers conducted by the Board of Governors, the Federal Deposit Insurance
PAGE 3.

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Ron Mamita added this note|
This smells fishy to me... Appease the public while protecting themselves and reducing a liability with misdirection. Now back to business as usual.
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