Whitewash

Goldman Sachs Said to Be Part of Fed-Led Foreclosure Settlement

Goldman Sachs Group Inc. (GS), Morgan Stanley (MS) and two other banks may agree as soon as this week to settle claims over botched foreclosures in an accord similar to one reached with 10 other loan servicers, two people briefed on the discussions said.

The agreement, also involving HSBC Holdings Inc. (HBC) and Ally Financial Inc. (ALLY), would end case-by-case reviews of foreclosures under earlier accords with the biggest mortgage servicers, said the people, who declined to be identified because the talks are private. The Federal Reserve-led discussions specified at least $1.5 billion in cash and assistance for borrowers, one of the people said.

Ten servicers agreed Jan. 7 to an $8.5 billion settlement with the Fed and the Office of the Comptroller of the Currency that ends the outside reviews in exchange for a deal that limits their costs to $3.3 billion in cash for foreclosures in 2009 and 2010 and $5.2 billion in other mortgage-related aid.

The new settlement could bring the industry payout to $10 billion and expands beyond the 14 firms required to review foreclosures under the April 2011 agreement. IndyMac Bancorp’s successor OneWest Bank FSB and EverBank Financial Corp. (EVER) have yet to reach settlements with regulators.

“We continue to have conversations with the servicers we regulate who were under April 2011 enforcement actions but were not part of the settlement,” said Bryan Hubbard, an OCC spokesman. OneWest, EverBank and HSBC are included, he said.

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