Goldman Sachs successfully fulfilled their $1.8 billion consumer-relief obligation under its 2016 settlement agreements with the U.S. Department of Justice and three states. According to the Independent Monitor of the settlements, Professor Eric D. Green, “This directly and materially assisted homeowners struggling to afford to stay in their homes.”
About 39% of the credit was earned under the Global Settlement Agreement, which provided consumer relief to three states: California, Illinois, and New York. In the Global Settlement Agreement, the states of California and Illinois were provided with $1.52 billion in consumer credit relief, and in the New York Settlement Agreement, $280 million of consumer credit relief was provided which supported many homeowners at risk of foreclosure.
The two settlement agreements resolved potential claims about the marketing, structuring, arrangement, underwriting, issuance and sale of mortgage-based securities. Under the settlements, Goldman Sachs has agreed to provide a total of $5.06 billion, including consumer relief at a value of $1.8 billion, and to be distributed by the end of January 2021.
The data in the Monitor report indicates that modifications for first lien principal reductions — the largest piece of consumer relief — resulted in a 27% reduction in average principal and a reduction from 137.4% to 92.1% in average loan-to-value ratio.
"I am pleased that I and the professionals on my team were able to play a part in seeing that homeowners and communities received the full benefits of the $1.8 billion in Consumer Relief,” Professor Green said.
Between october 1, 2020, and June 16, 2021, Goldman Sachs forgave the balance on 560 first lien mortgages for total forgiveness of $861,969, and an average forgiveness of $50,704. They also forgave a total reportable credit of $927,390. The loans forgiven are spread across eight states, with 27% of the credit dedicated to the three Settling States and 44% dedicated to the Hardest-Hit Areas.
Goldman Sachs also deferred the repayment of the principal due on 37 mortgages for a total of $2,280,865 in principal payment deferred. The average deferral was $61,645 and total reportable credit was $988,821. The loans are located in 12 different states with 59% of the credit in the Settling States and 68% in the Hardest-Hit Areas.
Goldman Sachs is also seeking credit for extinguishing 33 second lien mortgage loans with $1,888,067 in total principal forgiven. The average extinguishment was $57,214 and total reportable credit was $806,066. The loans are spread across 19 states with 45% of the associated credit in the three Settling States.
Additionally, Goldman Sachs extinguished or forgave $1,754,044 in unsecured loans or loans secured by junior liens. The average extinguishment or forgiveness was $50,116 and total reportable credit was $636,459. The loans are spread across 22 states with 18% of the credit in Settling States and 69% in Hardest-Hit Areas.
Professor Green stated in the report that this "closes the book" on his oversight of three of the major bank settlements stemming from the 2008 financial crisis.
The report is available at the Monitor's website: http://goldmansachs.mortgagesettlementmonitor.com.
