Federal Reserve Reaches Agreement with Goldman Sachs and Morgan Stanley to Pay $557 million to Mortgage Borrowers - January 18, 2013

For immediate release (From the Federal Reserve Board)

Goldman Sachs and Morgan Stanley have reached agreements in principle with the Federal Reserve Board to pay $557 million in cash payments and other assistance to help mortgage borrowers.

These agreements are similar to those announced on January 7, 2013, between 10 mortgage servicing companies and the Office of the Comptroller of the Currency (OCC) and the Federal Reserve Board. Like the other institutions, Goldman Sachs and Morgan Stanley were subject to enforcement actions for deficient practices in mortgage loan servicing and foreclosure processing.

The sum paid by Goldman Sachs and Morgan Stanley includes $232 million in direct payments to eligible borrowers and $325 million in other assistance, such as loan modifications and forgiveness of deficiency judgments. More than 220,000 borrowers whose homes were in foreclosure in 2009 and 2010 with the former subsidiaries of Goldman Sachs (Litton Loan Servicing LP) and Morgan Stanley (Saxon Mortgage Services, Inc.) will receive cash compensation under the agreements in principle. Eligible borrowers are expected to receive compensation ranging from hundreds of dollars up to $125,000, depending on the type of possible servicer error.

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