Goldman Sachs and Morgan Stanley have agreed to settle a government suit by paying a combined $557 million to settle complaints that the wrongfully foreclosed on homeowners who should have been allowed to keep their homes.
Goldman will pay $330 million and Morgan Stanley will pay $227 million. While consumer groups say that the government regulators settled for too little and are allowing the banks to avoid full responsibility for foreclosure abuses. The banks agreed to pay $232 million in cash compensation to homeowners to end an independent review of loan files required by a 2011 action by the Federal Reserve and the Office of the Comptroller of the Currency. The remainder of the money, $325 million, will be used to forgive outstanding principal on home sales that were sold short of balances owed, and to reduce mortgage balances on existing loans.
Around 220,000 homeowners were in foreclosure in 2009 and 2010 and are eligible for payments under this settlement deal. These payments could range from a few hundred dollars to as much as $125,000. The amount will be based on the type of “possible” error. A much larger deal with major banks had similar settlement terms, but there are still complaints that the government let the banks get away with too much for too little.
Goldman Sachs and Morgan Stanley have agreed to settle a government suit by paying a combined $557 million to settle complaints that the wrongfully foreclosed on homeowners who should have been allowed to keep their homes.
Goldman will pay $330 million and Morgan Stanley will pay $227 million. While consumer groups say that the government regulators settled for too little and are allowing the banks to avoid full responsibility for foreclosure abuses. The banks agreed to pay $232 million in cash compensation to homeowners to end an independent review of loan files required by a 2011 action by the Federal Reserve and the Office of the Comptroller of the Currency. The remainder of the money, $325 million, will be used to forgive outstanding principal on home sales that were sold short of balances owed, and to reduce mortgage balances on existing loans.
Around 220,000 homeowners were in foreclosure in 2009 and 2010 and are eligible for payments under this settlement deal. These payments could range from a few hundred dollars to as much as $125,000. The amount will be based on the type of “possible” error. A much larger deal with major banks had similar settlement terms, but there are still complaints that the government let the banks get away with too much for too little.