Monitor Report: Goldman Sachs Completes $1.8B Consumer-Relief Mandate Under 2016 Mortgage Settlements

BOSTON, July 1, 2021 /PRNewswire/ -- Goldman Sachs has successfully completed its $1.8 billion consumer-relief obligation under its April 11, 2016 settlement agreements with the U.S. Department of Justice and three states, according to the Independent Monitor of the settlements, Professor Eric D. Green.

In his sixteenth and final report, Professor Green said Goldman Sachs earned over $1.8 billion in credit after providing more than $1.52 billion of credited Consumer Relief under the settlement agreement with the U.S. Department of Justice and the States of California and Illinois ( the "Global Settlement Agreement") and $280 million of credited Consumer Relief under the related settlement agreement with the State of New York (the "New York Settlement Agreement"), which supported initiatives for homeowners at risk of foreclosure.

"This directly and materially assisted homeowners struggling to afford to stay in their homes," said Professor Green.  "I am pleased that I and the professionals on my team were able to play a part in seeing that homeowners and communities received the full benefits of the $1.8 billion in Consumer Relief." 

Some 39% of the credit under the Global Settlement Agreement was earned from Consumer Relief in the three Settling States. Professor Green noted in the report that the data indicated that modifications for first lien principal reductions—the largest piece of Consumer Relief—resulted in an average principal reduction of 27% and a reduction in the average loan-to-value ratio from 137.4% to 92.1%.

The final report covers October 1, 2020, through June 16, 2021, or eight months and 15 days excluding the end date. During this period, Goldman Sachs forgave the balances due on 560 first lien mortgages, representing total principal forgiveness of $61,710,171 and an average first lien principal forgiveness of $110,197. Total reportable credits amounted to $62,872,653 after the application of appropriate crediting calculations and multipliers. The modified mortgages are spread across 40 states, the District of Columbia, and Puerto Rico, with 46% of the credit located in the three settling states and 38% of the credit in Hardest-Hit Areas.

Goldman Sachs also forgave amounts due and previously deferred on 17 first lien mortgages for total forgiveness of $861,969, an average forgiveness of $50,704, and a total reportable credit of $927,390 after the application of appropriate crediting calculations and multipliers. The loans are spread across 8 states, with 27% of the credit in the three Settling States and 44% of the credit in Hardest-Hit Areas.

Goldman Sachs deferred the repayment of the principal due on 37 mortgage loans. The total in principal repayment deferred was $2,280,865, with an average deferral of $61,645 and total reportable credit of $988,821 after the application of appropriate crediting calculations and multipliers. The loans are located in 12 states, with 59% of the credit in the Settling States and 68% in Hardest-Hit Areas.

Goldman Sachs sought credit for the extinguishment of 33 second lien loans with $1,888,067 in total principal forgiven, an average extinguishment of $57,214 and total reportable credit of $806,066 after the application of appropriate crediting calculations and multipliers. These loans are located in 19 states with 45% of the associated credit in the three Settling States.

Lastly, Goldman Sachs received credit for 35 actions involving the extinguishment or forgiveness for $1,754,044 in unsecured loans or loans secured by junior liens. These loans had an average extinguishment or forgiveness of $50,116 and total reportable credit of $636,459 after the application of appropriate crediting calculations and multipliers. The loans are located in 22 states, with 18% of the credit in the Settling States and 69% in Hardest-Hit Areas.

Goldman Sachs' two settlement agreements resolved potential claims regarding the marketing, structuring, arrangement, underwriting, issuance and sale of mortgage-based securities. Besides the Department of Justice, California, Illinois and New York, Goldman Sachs reached settlements with the National Credit Union Administration Board and the Federal Home Loan Banks of Chicago and Des Moines. Under the settlements, Goldman Sachs agreed to provide a total of $5.06 billion, including consumer-relief valued at $1.8 billion to be distributed by the end of January 2021.

Professor Green, a professional mediator and retired Boston University law professor, was named by the settling parties as independent Monitor with responsibility for determining whether Goldman Sachs fulfills its consumer-relief obligations. He has assembled a team of finance, accounting and legal professionals to assist in the task.

In his final report, Professor Green noted that this report "closes the book" on his oversight of three of the major bank settlements that grew out of the financial crisis of 2008. Professor Green stated, "The remediation process through these proceedings has taken thirteen years, during which billions of dollars in relief has been provided to consumers injured by the housing market collapse and mortgage-backed securities catastrophe of the last decade and a half. The costs of this disaster have been enormous and, despite these settlements, are still being felt by many. The Monitor appreciates the cooperation and effort of the many people and organizations responsible for providing this relief, but sincerely hopes that the lessons learned about the behaviors that created the situation in the first place will not be forgotten so that in the future similar calamities may be prevented in the first place."

 The report is available at the Monitor's website at http://goldmansachs.mortgagesettlementmonitor.com. The website provides further details about the settlement, plus contact information for Goldman Sachs, the Department of Justice, the Attorneys General of California, Illinois and New York, and agencies that provide legal or tax advice to consumers.

The Monitor's mailing address is:

Monitor of the Goldman Sachs Mortgage Settlement, P.O. Box 10310, Dublin, OH 43017-5910, and the e-mail address is [email protected].

SOURCE Monitor: Eric D. Green