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Goldman Sachs Moves Forward on Consumer Relief Obligation

Goldman Sachs has reached 62 percent of its $1.8-billion consumer relief obligation, which was enacted under its two April 11, 2016, mortgage-related settlement agreements with the U.S. Department of Justice and three states. Eric D. Green, the independent Monitor of the consumer-relief portions of the agreements, has announced that the forgiveness of balances due on 1,127 mortgages has moved the bank $127.1 million closer to its agreement sum.

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

Since the last report, produced on May 15 of this year, Professor Green reports that “Goldman Sachs forgave the balances due on 1,024 first-lien mortgages, for a total principal forgiveness of $113,504,343, an average of $110,844 per borrower.”

The bank also forgave amounts due and previously deferred on 103 first-lien mortgages, for total forgiveness of $5,139,100, an average of $49,894 per borrower.

These two reports resulted in the total reportable consumer-relief credit of $127,109,482 after the application of crediting calculations and multipliers specified in the settlement agreements.

"Approximately 28 months after the settlement agreements were signed, the total amount of credit claimed and conditionally validated in my reports under both settlement agreements comes to $1,120,530,304, or 62 percent of the $1.8 billion target," Professor Green said.

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

According to the statement, the modified mortgages were spread across 45 states and the District of Columbia, “with 36 percent of the credit located in the settling states of New York, Illinois, and California, and 46 percent of the credit located in Hardest Hit Areas, or census tracts identified by the U.S. Department of Housing and Urban Development as containing large concentrations of distressed properties and foreclosure activities.”

You can read the full Monitor's report here, containing a detailed explanation of how the credit is calculated, as well as a description of the protocols that Professor Green and his legal and financial advisers developed with Goldman Sachs to help determine when credit is properly approved or denied for loan modifications in which principal forgiveness is earned in stages as the homeowner makes loan payments on time.

About Author: Kristina Brewer

Kristina Brewer is the Editorial Assistant of Publications for the Five Star Institute, including DS News and MReport magazine. She is a graduate of the University of North Texas (UNT), where she received her Bachelor of Arts in English with a concentration in rhetoric and writing and a minor in global marketing. During this time, she served as Director of Philanthropy in the national women’s fraternity Zeta Tau Alpha, of which she is an alumna. Her passion for philanthropy continued after university when she was an intern at Keep Denton Beautiful, a local partner of Keep America Beautiful, where she drove membership, organized events, and led social media campaigns. Brewer honed her writing at the North Texas Daily, UNT’s student-run newspaper where she wrote about faculty, mentorship, and student life. Brewer also previously worked at Optimus Business Plans where she helped start-ups create funding proposals, risk assessments, and management plans.
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