Powered by MOMENTUM MEDIA
Powered by MOMENTUM MEDIA
subscribe to our newsletter
subscribe to our newsletter

Goldman Sachs to pay $7.25 billion

Global investment bank Goldman Sachs will fork out over US$5.06 billion ($7.25 billion) in consumer relief to resolve an ongoing mortgage investigation.

Under the terms of an agreement in principle, the firm will pay a US$2.385 billion civil monetary penalty, US$875 million in cash payments, and US$1.8 billion in consumer relief.

“For distressed borrowers and underwater homeowners, the consumer relief will provide financing for construction, rehabilitation and preservation of affordable housing and support for debt restructuring and housing quality improvement programs,” the bank said in a statement.

Advertisement
Advertisement

“The consumer relief will also include debt forgiveness, the prevention of foreclosures and land banks.”

The agreement is in regards to the firm’s securitisation, underwriting and sale of residential mortgage-backed securities between 2005 and 2007.

The bank said that the agreement will “resolve the actual and potential civil claims by the United States Department of Justice, the New York and Illinois Attorneys General, the National Credit Union Administration (acting as conservator for failed credit unions) and the Federal Home Loan Banks of Chicago and Seattle”.

This settlement highlights the ongoing aftermath of the United States subprime mortgage crisis, which has had wide-ranging effects on the housing market, economy and the financial sector.

To date, the United States Department of Justice has already obtained multi-billion dollar settlements from other large US banks.

In 2013, JP Morgan reached a $13 billion settlement for its role in underwriting and selling residential mortgage-backed securities, and the Bank of America settled for $16.65 billion in 2014.

The agreement, which has been made in principle and is thus yet to be finalised, is subject to the negotiation of documentation, and it is not yet certain if the U.S. Department of Justice and other governmental authorities will agree on the documentation.

The agreement in principle will reduce earnings for the fourth quarter of 2015 by approximately $1.5 billion on an after-tax basis.

[Related: Citi to pay US$1 billion in RMBS claims]

Goldman Sachs to pay $7.25 billion
mortgagebusiness

Latest News

A major insurance provider has announced that it would restrict its offering of lender’s mortgage insurance in light of emerging risks ass...

Lenders will be allowed to extend their pre-approval period for borrowers using the First Home Loan Deposit Scheme given the coronavirus pan...

The federal government has announced several changes to the Takeovers Panel, which include the reappointment of an ANZ executive and the ap...

FROM THE WEB
podcast

LATEST PODCAST: Further relief for SMEs and borrowers

Do you expect COVID-19 to reduce or increase your business flows?

Why we’ll keep delivering for our communities in the face of COVID-19

alex

As Australia tries to keep pace with a rapidly changing business and social landscape in the wake of COVID-19, Momentum Media is leading the way delivering essential content to our communities, writes Alex Whitlock, director of Mortgage Business.

Read more

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.