Goldman Sachs Group Inc.’s mortgage- servicing unit, which suspended some evictions and foreclosures in October, “has recently resumed some of those activities,” according to a regulatory filing today.
Litton Loan Servicing LP said on Oct. 8 that it was suspending some foreclosures to review its procedures. Attorneys general from 50 states have been investigating the mortgage industry’s foreclosure practices after discovering some firms used faulty or falsified paperwork to seize homes.
“At the date of this filing, the firm is not aware of foreclosures where the underlying foreclosure decision was not warranted,” the New York-based company said in its annual 10-K filing with the U.S. Securities and Exchange Commission. “As of December 2010, the value of the firm’s mortgage servicing rights was not material and any impact on their value would not be material to the firm.”
Goldman Sachs said it is cooperating with requests from regulators and state attorneys general and continues to review Litton’s practices. The inquiries “may result in the imposition of fines or other regulatory action,” the firm said.
Chief Financial Officer David A. Viniar said on Oct. 19 that the company was unlikely to have large losses from mortgage-related issues because Goldman Sachs played a small role in creating and packaging such loans. He said at the time that an “extensive review” of Litton’s practices identified “certain process issues” in the foreclosures. The firm still believed the decision to foreclose was justified, he said.
Goldman Sachs, the fifth-biggest U.S. bank by assets, acquired Houston-based Litton in December 2007 as investors including billionaire Wilbur Ross and Centerbridge Capital Partners LLC bought mortgage servicers to help them better understand the market and profit from buying discounted loans.
Viniar, 55, told analysts in December 2007 that the purchase was “not just to help us take advantage of the distressed environment that we think we’re in,” adding that “we think being able to purchase them is going to help us as the whole mortgage market kind of unfolds going forward.”
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