Coakley reaches historic $60M deal with Goldman Sachs
BOSTON (Legal Newsline) - An agreement announced Monday requires investment bank Goldman Sachs & Co. to pay $60 million to settle subprime lending claims brought by the Massachusetts Attorney General's Office.
The settlement sets up a $50 million loan refinancing program with state customers and provides for a $10 million payment to the State. Attorney General Martha Coakley said her investigation into the securitization of subprime loans began in Dec. 2007.
It is the first settlement with a major investment bank over subprime mortgages.
"Since I became Attorney General, our office has sought accountability at all levels of the subprime lending crisis," Coakley said.
"We are pleased that Goldman cooperated during this investigation and that it has committed to working with our office to help Massachusetts borrowers who are struggling with unsustainable subprime loans.
"We will continue to investigate the deceptive marketing of unfair loans and the companies that facilitated the sale of those loans to consumers in the Commonwealth."
Homeowners with their first mortgage, held by Goldman entities, will have their payments reduced by up to 35 percent, and second mortgages may be reduced by 50 percent or more.
Borrowers whose first mortgage is "significantly delinquent" will still pay a monthly payment while seeking to refinance or sell their home, Coakley said. If nothing happens in six months, Goldman will reduce the principal owed on the existing loans.
Coakley's office is investigating whether securitizers facilitated unfair loans, failed to determine if loans purchased from originators complied with stated underwriting guidelines, failed to prevent the placement of problem loans in securitization pools and been aware of unfair or problem loans.
From Legal Newsline: Reach John O'Brien by e-mail at email@example.com.