NY regulator, Goldman reach “robosigning” pact

(Reuters) – Goldman Sachs Group Inc will compensate some home loan borrowers for wrongful foreclosures under an agreement reached with a New York state banking regulator.

The agreement, which New York financial services superintendent Benjamin Lawsky reached with Goldman and Ocwen Financial Corp, contains several measures to strengthen the oversight of foreclosure proceedings.

It also will allow Goldman’s planned sale of its Litton Loan Servicing LP unit to continue.

A chief focus of the superintendent’s agreement, which was announced on Thursday, was putting an end to a practice known as “robosigning,” in which bank employees signed foreclosure documents without reviewing case files as required by law.

Goldman, Litton and Ocwen agreed to stop the practice, make new staffing and training requirements for employees handling foreclosures and withdraw pending foreclosure actions that are based on faulty paperwork.

They also agreed to compensate borrowers for wrongful foreclosures and strengthen protections for homeowners in relation to late payment fees and insurance costs.

Goldman also agreed to forgive 25 percent of the principal balance on mortgages that are 60 days overdue, a move that will cost the bank $53 million.

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