New York-based investment banking firm Goldman Sachs has agreed to pay $3.15 billion to settle a lawsuit filed by the Federal Housing Finance Agency alleging that Goldman Sachs sold faulty residential mortgage-backed securities to GSEs Fannie Mae and Freddie Mac, for which FHFA is conservator. The lawsuit named Goldman Sachs, related companies, and some individuals as defendants, according to FHFA. The suit was settled in the U.S. District Court of the Southern District of New York.
Under the terms of the settlement, Goldman Sachs will pay $2.15 billion to Freddie Mac and $1 billion to Fannie Mae to buy back the alleged faulty residential mortgage-backed securities the two GSEs purchased between 2005 and 2007. FHFA estimates the worth of the settlement to be about $1.2 billion. The settlement makes Fannie Mae and Freddie Mac whole on their investment in the securities in question, and as part of the settlement, the two GSEs will release certain claims they previously made against Goldman Sachs with regards to those same securities.
Foreclosure starts increased nationwide for the third consecutive month but are down 20 percent from last year, according to Black Knight Financial Services' "First Look" at mortgage data for July 2014 released today. With almost 91,000 mortgage starts in July, the volume of mortgage starts increased 2.7 percent from June, according to Black Knight. Overall inventory fell by 1.6 percent from June and 34 percent from July 2013 and has hit its lowest level since March 2008.