Goldman promises to stop robo-signing, but practice is still widespread among servicers

September 01, 2011 04:35PM

Goldman Sachs’ mortgage subsidiary said today it would stop the
illegal practice of robo-signing as part of a settlement with New
York’s Department of Financial Services and Banking Department, MSNBC
reported. The agreement was a precondition of allowing Goldman
Sachs’ sale of its Litton Loan Servicing subsidiary to mortgage
company Ocwen Financial. Goldman, Litton and Ocwen also agreed to
withdraw pending foreclosures if affidavits were robo-signed or

Under the settlement, the company is required to either
return property that was wrongfully sold back to the original
borrowers or provide compensation. Additionally, Goldman assured Benjamin Lawsky, superintendent of the
Department of Financial Services, that it would help troubled homeowners by writing down $53 million
in unpaid principal of home mortgages.
The deal also prevents Litton or Ocwen from adding late fees and other
servicer fees that make it more difficult for delinquent borrowers to
pay back what they owe.

Meanwhile, an investigation by American Banker echoes a recent report by
Reuters that robo-signing is still widespread a year after the problem was
uncovered, with many mortgage servicers such as Bank of America,
Wells Fargo, Ally Financial and OneWest Financial still
fabricating documents and backdating paperwork necessary to support their
right to foreclose. [MSNBC] and [American Banker]